One of my students has technique that is more effective than mine. He started of in our school as a 3rd degree black belt in Tae Kwon Do who'd spent some years in Fast Company with the Marines. He could already hand me my head on the first night he came to the dojo. Now he has great, gentle, aikido technique and a gentler disposition than when we first met. It doesn't take long for newbies to see that he has amazing skill. When they comment on it, I just say "Yup. He's a good aikidoka, and I'm really proud."
Regarding your friend's situation, I'd say leave the dojo if it's causing that much static. If the sensei is that sensitive about someone being better than him, then I'd say that he's on a different place on the path where "winning" and "losing" still matter. I wouldn't hold it against him; I'd just move on.