I want to address this question from a few different angles. But before I give an answer, some groundwork needs to be laid.
Teal'c as first prime
A first prime of a Goa'uld is basically like the Chairman of the Joint Chiefs, Secretary of Defense and Secretary of State rolled into a single position. Even if Teal'c was the first prime of a minor Goa'uld that would still be on par with a 4* general at the least. And while it is likely a minor Goa'uld under a system lord may actually serve diplomatic roles with other Goa'uld, their arrogance and self-centered behavior may actually present a risk in diplomacy versus a first prime who would not suffer from such afflictions.
However, Teal'c was the first prime of a system lord, which is an even more competitive position and in larger battles he would command the first primes of the under-lords in battle, effectively making him a 5* general that also served diplomatic roles as well.
Teal'c in day to day with SG-1
While Col. O'neill always loved to remind Teal'c that he was the commanding officer on most missions, there were dozens of times Teal'c flat out disagreed with the Colonel.
Teal'c has even "given" orders to Col. Pendergast when he "commanded" the Col to send the Deadalus to the dark side of earth's moon to find the Jaffa Hatak that was hunting Baal and the Colonel simply agreed with his "order".
Going beyond that, Teal'c has resigned from the SGC on numerous occasions and was always allowed to come back.
Reasons for not giving Teal'c a higher honorary rank
Teal'c began his journey with the Tauri with SG-1. And while Teal'c is over 100 years old and probably has more high-level command experience than even Hammond and O'neill combined, it would just be weird if Teal'cs honorary rank was higher than O'neill.
Teal'cs true honorary rank
Starting in Season 9 Teal'c has effectively transitioned into a Jaffa politician which would realistically make him the Jaffa ambassador to Earth.
So while Teal'cs true rank equivalent is that of a 5* general, he would only be honorarily promoted when O'neill was.
That said, he is an Alien, albeit an extremely loyal ally, so he could never hold an actual, or simulated rank, but an honorary rank is a different matter altogether.
In conclusion, Teal'cs role as Jaffa Ambassador is the most honorable and the most important role that he holds and his sacrifice to earth will be honored and remembered for all time. Shal Kek Nem Ron!