He doesn't seem to grasp the fact that 4e is simplified and that the rules are more "set in stone" than previous editions to ensure balance; he still seems to think that every rule in the game is a guideline that he can change as he sees fit.
If that's what he actually thinks, he's right. 4e DMG pg 172: "You're not even limited to the encounter rules in the book or the selection of monsters in the
Monster Manual--only your own imagination controls what you can do."
This causes a lot of issues in our games because he's not balancing things properly. Here's a few examples:
*He doesn't balance encounters; we only have 4 PCs but he uses encounters as-written in the published adventures. He says that the math WotC uses is flawed because we easily deal with encouners designed for 5 PCs but this is because half the time he forgets creature's powers, gets them flat out wrong, and/or plays monsters as mindless AI.
Are you complaining that he's throwing encounters that are to hard? That seems like a strange complaint because you admit that the encounters seem to be to easy. But then you complain that he runs the monster's wrong. So here's my question: what makes the encounter not fun? If you didn't know how the monster's were intended to be run or how the encounter's were designed would you still not find the experiance fun? Or is there something about the actual game play, beyond the encounter design issues that bothers you?
*Not only does he not scale down encounters, he also cheats us on XP as he divides the encounter by 5, not 4. He thinks that when a 4e adventure says it's for "14th - 17th level" it means like 1st edition where the PCs can be between those levels, when in fact it means it's supposed to take us FROM 14th level TO 17th level. We're playing through Demon Queen's Enclave right now but we're only level 13, about to hit level 14.
Technically, that's buy the book. 4e DMG pg 121 allows for varying the rate of advancement. If you didn't know how he divided-up the xp, would you care?
*He skimps on treasure; I'm not sure exactly what the ratio should be but we seem to have slightly less powerful items than we should have at 13th level.
Wealth by level in 4e isn't as cut and dry as it appears at first blush. While treasure parcels sugest that magic items up to four levels higher than the party are approte as truesure, there is nothing requiring that PCs have acess to such powerful magic items. While magic items have levels, it would be a mistake to think that you must always have magic items of your level. Since you seem to be doing fine in combat, I wouldn't worry about it.
*My girlfriend recently said she wanted to play, so I made her a character at the same level as us; until I convinced him otherwise the DM was wanting her to start a level or two behind, and STILL not scale the encounters or scale her XP accordingly to have her catch up; I can't seem to find an exact rule that says what XP amount new PCs are supposed to start with. He keeps saying that we blast through encounters with 4 PCs so "even if she was at 2nd level you would be better off than you are now, since you'd have 5 PCs".
First, there isn't a rule about how much xp new players start with. Second, the 4e rules don't care if everyone has the same xp or not. Third, the fact that it doesn't take as much xp to reach the next level at lower levels means that she would catch-up in level fairly soon. Your DM was right, it's ok if she's a little behind.
I really don't know how to deal with it; I have the 4e DMG myself and the stuff he says makes no sense at all to me, and IMO it's not how the game is designed to work; I've played 1st, 2nd, 3rd and now 4th edition of D&D. Sure, he's the DM, but IMO 4e supposed to be a lot more "these are rules, not guidelines" than previous editions were, because the game is intended to be balanced on core assumptions, or require DM interaction to bring things into balance. Once you start changing the core rules or things like that, you're breaking that balance, more so if you don't compensate for it like my DM seems to do.
Any advice on this situation?
There is one major balancing factor in 4e: the liner scaling of bonuses to attacks, defenses, and skills. It replaces the multitude of balancing factors 3.x had, and it's across the board for all classes. Unless he's changing that none of what you say he's doing in this post is unbalancing.
Has he changed any of the rules in the PHB like the grab rules, the number and type of actions monsters and PCs, get? What about skills? Those kinds of changes should, in my opinion, be discussed with players prior to implementation. However, encounter design and actually running the monsters are the domain of the DM and he or she should be given free reign in doing so.
My advice is to see if the two of you can alternate DMing duties. You sound like you have specific ideas about how to DM, and I think that if you had a chance to DM the way you wanted to, it wouldn't bother you that he has a different style.