The faeries had a massive lead with the stolen children and the PC wizard has asked his mentor to teleport them ahead to meet them. Without thinking, this high level (level 10) ex-adventurer wizard has ended up getting involved in the action because they emerged directly into a combat situation and it would seem strange if he didn't help.
[...]
However he's ten levels higher than them. I don't really want him riding about and stealing their thunder. But it's hard to think of a way for this wizard to leave the group, without him seeming a cold-hearted bastard who doesn't want to save the children, some of which he knows personally.
[...]
I don't want to accidentally end up with a ridiculous DMPC type problem NPC.
You've already done that by letting the players use the NPC as a mode of transport and support. No big deal, it happens.
There are plenty of ways to remove the NPC as a factor without going against his already established personality.
1) He is neutralized in some form or another by the faeries -- killed, charmed, a promise of non-interference extracted, etc. This could be a way to introduce the power behind the kidnappings if need be.
2) An even bigger threat comes to his attention, and he has to leave the party to deal with "a few bothersome faeries".
3) He holds back in combat or insist on that the PCs solve a riddle or a clue as "a test". If they press the issue the NPC may end the mentorship of his PC student, saying there's not much point in teaching someone if they're going to come running to him every time they get their nose bloodied.
4) Just because the NPC was an adventurer doesn't make him a saint. He could be paranoid and accuses the party rogue of plotting to steal from him, or maybe is prejudiced against half-orcs and dismisses their concerns as coming from a "dumb brute".
5) Maybe the NPC is not a perfectly competent strategist. His orders to the melee type could place them into a tactical disadvantage or steer them into a trap, or he assumes the spellcasters have access to spells they don't possess. ("Well, why didn't you just fly over the heads of the archers?")
Another thing to consider; if the higher-level NPC is doing all of the heavy lifting, then the PCs' XP awards should be adjusted to match. That may discourage the players from finding another NPC to hide behind the skirts of.