What if she had been an Aikido student instead?
The difference I see between Aikido and school is (a) grades in school can affect scholarships/grad school/etc, grades in Aikido don't count for much of anything. (b) even up through college, most students are young and immature... easier to get hurt, make dumb choices, act irresponsibly, or be swayed by a childish crush on a teacher... not what I'd expect in an adult in an Aikido class (or one in college for that matter, but most college students are still too close to childhood).
I've said it before in other posts, but anyone who imbues their sensei with so much power and control that they consider there to be an unequal power situation needs to reasses whether they need counselling as well as Aikido. My CO has power over me, when I was a practicing Catholic my priest had control over me... my sensei certainly does not.
As for the injury with the visiting girlfriend... we have an instructor where I train that we laugh always gets extra macho, with enthusiastic throws and wild atemi whenever there is anyone visiting, especially female. It's not that there is a conscious effort to beat-up other males to steal their women as it is showing off. He has a girlfriend, it's just his personality.
Lots of instructors have wives who also train, I have to believe not all of them were always about the same level... especially those that came to other countries to teach already highly ranked.
If two students are OK to date, what happens when one progress to instructor and the other does not-- should they break up? If it is OK that they stay together, then is it because those students are more mature and have more emotional control than the single sensei does? I say, be adult in your decisions, and trust those around you to be responsible and adult in theirs, and worry about your Aikido instead.
Erik, you are right in that once one person does something others feel OK about doing it themselves... but it can happen whether it is the sensei, or just another student. The sensei's bad behavior didn't put bad behavior into the hearts of the others, it was there already and might have come out regardless. And a sensei's good behavior isn't necessarily copied by his students either.