Re: How to deal with my sempai?
I agree with others -- it doesn't seem like there should be a problem. You're the teacher, he accepts it and defers to you.
In Japan, in an adult dojo, sempai/kohai relationships would be fairly tenuous in the first place, superceded by rank in most on-the-mat situations, and all the more so when one person has a long blank in training like in this case. The kohai's respect for the sempai would be demonstrated in particular speech patterns and other incidental ritualized interactions, none of which are present in Western society and can be safely ignored. By no means would the higher ranked kohai be submissive and deferential in a class he was teaching.
And by all means keep an open mind and learn from him, but don't sell yourself short. You may have picked up somethings that he never did, or that he has lost. It sounds almost like Aikido Accomodation Syndrome (thanks to Ellis for this term!) in that in your head he's your sempai, and thus, you can never reach his level.