Oh man. I feel for the OP.
I've been in this situation. It sucks (you wouldnt be from San Jose, would you? Heh...too much coincidence...).
Here's the deal. This might not be a popular thing to say, but gamers especially often suffer from a lack of social skills. In fact, some of the worst offenders make for the best roleplayers! I know this both from my own gaming experience, and also from my years of working at a game store. The problem is that, some people are jerks because its how they deal with their own reality. This wont make your situation any easier, but letting this guy know how you feel might estrange the two of you. He might not get your point, or wont care. Its hard to say. Sometimes you have to decide what you want most, make a go at being as diplomatic as you can, and trust in fate.
Two things might come of it:
1. Your friend pouts and leaves. Maybe he comes back later, maybe not, but you get to keep your game and group and have some mourning
2. Your friend gets it, desires reconciliation, shows some maturity, and the two of you forge ahead together.
A lot of it depends on your friend. It sounds like he may have some issues that are going to complicate things (if he didnt, you wouldnt be in this predicament in the first place!), and you may have to just roll the dice. I wish you luck, and courage.