I don't think that's a very useful reply, Dave. We should not turn off our brains when we enter the dojo, and most of us couldn't even if we wanted to. I have a very curious skeptical mind, and I have a very hard time accepting arguments from authority. I have been willing to suspend disbelief about teachings based on the experience and authority of a martial arts teacher... temporarily, but I expect to one day understand the whys and why nots of any teaching for myself. To me, that's what learning is.
If he finds himself doubting his sensei's decisions to the point of 'habit', he'll probably have to find another sensei. Depending upon the sensei, moving on could be a good thing. What if Ken shows up to class next week and his sensei unfurls a giant Nazi flag and starts lecturing about racial purity? Would you still say 'don't second-guess the sensei'?
In this situation, I think you should definitely keep quiet about your doubts around the sensei and fellow students. Also, given the nature of the issue, I'd say you'd be better off not worrying about it and trying to stay focussed on your own training. In my experience, it is not uncommon to have visitors or transferred students, or even people within one's own dojo who seem undeserving of their rank. I've known a woman who got a shodan in 2 years in Japan whose skills were worse than many 4th kyu at our dojo. We had a visitor once who got a Sandan from some place who could barely take ukemi or do ikkyo. In many dojos, people will eventually get promoted just by virtue of having been there for a long time, even if they test poorly. Their rank is not your rank, and only you can decide how important yours is to you.
I decided rank wasn't important to me for most of my time training. Now that I'm more of a free agent, having a disproportionately low rank to my experience is a bit of a pain. Oh well. You make your bed, then you lie in it.