You should challenge this so called sensei in front of the class. If he loses his bottle and backs down then you probably don't have anything to learn from him. If he fights and loses you definitely don't have anything to learn from him. If he fights and wins then his ego will be appeased and if he allows you continue training at the club.
Are you serious? This is so unethical, challenging a sensei in his own dojo.
I have gone through a similar experience when years ago I jump-start my aikido training in another dojo. I thought I could be helpful with my dojo mates by giving some tips now and then to shorten the learning process. I didn't realize that the sensei was a full-time instructor and my being helpful to my dojo mates would jeopardize his position. Except for sensei, there was no yudansha in the class and most of his 1st Kyu students have been with him for 5 or more years. The honeymoon was over when one day some of his favorite students decided to steer clear away from me for no apparent reason. Then one day, sensei "challenged" me - a petty incident he would probably have regretted - after that I went and found a new dojo to train.
Off the topic. Aikido dojo are as just mystical as the art; for some unapparent reasons, senior students have this undying loyalty to their sensei even though they have realized the instructions are crap and they alone have the rights to criticize.
FWIW, this is the sensei's dojo. My advice is to leave.
My 2 sen