Having read this thread through, I feel more strongly that the Neutral Evil response to this DM is the appropriate one.
You'll never win a vote with the DM's girlfriend, sister, and sister's SO. Open communication only leads to you being on the outside here. So, you need to start assuming that there are no rules.
After all, your DM has clearly stated that he's not going to follow rules of XP or monster abilities, and that he's going to re-write reality to say that you should have read his mind and RPed with monsters drawing weapons.
Well, there's only one way to read his mind consistently: read his module. The only way to give him what he wants--knowing what to fight or RP about--read the module and give it to him. If your character's life depends on knowing when the DM is about to start playing the monsters as written, then you should know what they're capable of when they do so.
If your DM breaks the social contract, you're a sucker if you keep the social contract while he breaks it when it comes to rules, rewards, tactics, encounter design and adventure design.
You're playing a new game, "guess what I'm thinking" and there's only one way to play that game... steal his notes.
If the name of the game is to have fun and the only valid reason for a DM to cheat is for the players to have more fun and you're not having fun... well, it's time to cheat or walk away.
If someone starts cheating at cards, you don't take the high road. You leave the table or you start counting cards.