You've got a nut-job here and a serious safety issue. Calm discussion and logic does not work with such people. Show him the door post haste and be glad that no one has been hurt already. You and your other instructors are also nuts for putting up with such behavior. You are as much to blame. The nut-job probably can't help being a nut-job, but you and other instructors, I assume, have no excuse. Politness has nothing to do with it.
I agree entirely. We have been the ones allowing this to continue, for the sake of keeping peace with the guy and not causing a scene we've tried behind the scene methods of dealing with him. We've yet to go as far as give him ultimatums however. Sensei ask we not give ultimatums. Sensei has simply said to all of us "You need to keep control of your class, and I expect you to." Some instructors, including myself have taken his uke from him and directed them to new partners who are seniors and won't put up with it. It often leads to him sitting out... which is good with me. But I have to remind him he doesn't get to decide which part of the class he wishes to participate in or not. Come to think of it I had that same conversation with a 5 year old in the kids class last week lol