I guess everyone has a story. For me, it was a highly skilled student who had a little bit of trouble with an inferiority complex. His AiKiDo was beautiful to watch but, unfortuntaely, he often hurt people (hospitalization wasn't common but it was scary to work with him). He was with me in one dojo for a while where he eventually left because the sensei held him back from testing. Then I changed dojos and he would show up at the new dojo with some regularity. The interesting thing in light of this thread is that the new teacher seemed to have some sort of philosophical commitment to the idea that we have to deal with the conflicts life throws at us. As such, he felt that he as a teacher and we as students would learn something from the very idea that dealing with this guy was inevitable. He extended his friendship towards the guy, and would talk to him after class or over beers about AiKiDo and about life. He would try to balance giving the man a free rein to be himself with the gently offered comment. I think that in the long run this 'worked' to a large extent. Still, we're talking about years of having to put up with the man and we're also not talking about a night-and-day change in personality. He is still himself, still obnoxious, still carrying a chip on his shoulder, still takes pleasure in intimidating others. I guess the biggest change is that people aren't actively scared to work with him anymore and he doesn't chase people out of the dojo. In some ways that's a big change and a big success.
My own response to him was largely passive. I tended to insist that we work (at least more or less) 4 and 4 since he had a thing about enjoying being nage much more than he enjoyed being uke. I scrupulously respected his rank. I took my ukemi with him in a way that felt as safe as possible to me without seeking to challenge his skills: I saw it as an exercise in figuring out how to feel safe in a dangerous situation. If he had been hospitalizing people, I would have refused to work with him. A number of times, I felt that a situation was getting out of hand, and I had a word with my sensei. This was rarely 'succesful' in any obvious or immediate way, but I figured that was ok. It was my job to do my job, and I would let my sensei do his in whatever way he best understood. I learned a lot from my sensei about not trying to do other peoples jobs for them, no matter how much I feel like I could do it better. Taking responsibility for yourself first is the recurring theme in this thread and I feel it is really at the heart of the issue.
One piece of advice I would offer to 'anonymous coward'
is the following. It seems as though you are wrestling a lot with the question of how to deal with the situation, and at the same time wrestling with the question of whether or not to leave the dojo. I recommend laying one of these questions aside for a while. Either figure out whether you are staying or going, or assume you are staying (and stuck with the situation) and try to decide how to handle it. When you try to do both at the same time, you undermine your ability to think clearly about either one. It's always possible to switch to the other question if your situation or your attitude changes. That is, if you decide to stick it out and assume you are stuck and think about your strategies, then it is still possible later to decide to leave.
And, one more piece of advice (wasn't I just saying that I learned how to do my own job and not others?
), choosing not to train with your dojo-mate and letting other people know about your decision doesn't have to be seen as a 'political ostracism' or a 'dojo rebellion.' You are doing what you are comfortable with. You are sharing your strategy with others. They will make their own decisions and their own judgements.