Re: No respect
What kind of help do they expect from an internet forum if their culture dictates something less than an authoritarian response? The dojo cho should deal directly with the disrespectful usurper and either bring him into line or remove him from the dojo. The other students could also make it very clear that the senior student's conduct is unacceptable to them as well. Since you allude to a culture where that is seemingly impossible, learn to live with it, move on to another school, or wring your hands.
Leaders, formal or informal do not have to be harsh or confrontational, but they do have to act for the common good of the organization. Sometimes that requires making unpopular decisions, but always requires a solution and action when there is a real problem that affects the welfare of the community and organization. I apologize for sounding unsympathetic - wait, no I don't. Take action or don't - the choice and consequences are theirs. I hope they find a solution that is acceptable for them.