One thing I am seeing in this discussion is many people loosing focus and are nitpicking on certain aspects and are not reading whats really being said.
Bat, I support you. You are NOT whining. You are concerned and afraid that you have to make a choice that will undermind both your friendship with someone you live with but also also reluctantly seperate yourself from a situation you enjoy except for a few things that are dinishing the fun for you. This is not whining. this is a plea for aid. Its not splitting hairs thiers a difference.
many of the comments here have quite diligently pointed out that its a custom PClass by a 4th party fan. Originally he was using the WotC Published Pclass. He dident like it but reverted to 4th party cause it WAS weaker but not as more heavily nerfed 3.5 WotC of the class. If asked (and you have) I would suggest reviewing the 3.5 version as a WotC published peice. It is weaker still but has (presumably) had playtesting and feedback that resulted in this (not saying WotC gets it right all the time, but it does led to it lagitamacy).
As far as the thread title. We dont personally know the guy. Bat described him (and we can only trust he was accurate). Bat knows the guy more and would know if the guy is being lazy or is exercising rule 0 excessively. Several things point to that the GM is actually being lazy. The GM not knowing anything about the class until confronted by its potential power. People dont like being put on the defensive and a situation like that could put a GM in defense mode quickly expecially if they are inexperienced. When defensive people tend to react instead of respond. Their open mindedness is marred by the apperent need to correct something they cannot control and result in artifical controls that do not not nessisarly work with the rest of the machine. All to insure that they remain in control.
Another aspect I can see that suggests the GM is lazy is his changing of Finger of Death. The change made to me represents an attempt to control somethings appearent power because they quite likly do not more fully understand the power and abilities involved. And as someone pointed out, the higher level the characters become, the more options, versitility, capability they have at their disposal. This further requires that the GM understand both the groups capabilities and their counters. Not specifically everything but understand some of the basics. How do you effect ethereal creatures. What works and what doesnt etc. Instead he has changed the rules and exerted and artifical control because of the percieved power of finger of death. Again. their are counters to death magic, but since he doesnt seem to know them he's remade it into something he does understand.
Why does the above suggest he's lazy. It is not hard to find the answers with just a little time and effort to look. read through the Pclass and what it does. know what ethereal does and how ethereal creatures are affected. same with how death magic is countered. Further, what the save DC's for the spell are and know the capabilities of the creatures the party fights so as to determine what the chance that the spell will succeed or not. This is not something thats hard to do if they bothered to look.
My Advice for the GM would be that they should run lower powered games. Characters under 10th level. Further I would encourage the GM to study the rules a little more. This is not something that needs to be painstaking, just read up on what certain things do (what happens when your ethereal, skim the brief descriptions of spells for what they do and hte level of spells that do certain things, talk to the players about comprised instead of edicts and find out what they players what out of a class and what they think would be a reasonable scaling down or trade-off in abilities as they understand it).
My Advice for your friend with the shifter PClass. Built a portfolio of favorite forms. say 2 per a level once they started taking the shifter class and decide the two forms based on each level the character was (think of it almost like the Wizards Automagic spells as he gains a level he gains 2 spells to add to his portfolio, develope the favorite forms following a similar line of at 1st Level the shifter employed this and that creatures as favorite forms, at 2nd he gained this class feature and could do this, so he chose these two creatures to add to their porfolio). Have him make up a rough stat-block for what happens to the character while in that form almost like having a cheat-sheet for summoned monsters handy. Show these to the GM <Give him copies even>. The portfolio shouldent be used to limit but should represent popular or prefered forms that you'd employ.
My Advice for you. Talk to your GM And your friend. Suggest the things I suggested to help the GM better understand the game and not need to resort to Rule-0 like edicts and to help your room mate better enjoy the game by both having many of his forms at his disposal and to improve his relationship with the GM by showing them just what he can do or at least most likly can do so its not a total surprize. Assure both that the list of 20 favorite forms should not be intimidating and not to panic. the GM should use it as a limit, but the player should favor those forms.
I hope these suggestions help. Again Bat, I dont belive you are wrong. Your friend is wanting to do something that creates a difficult enviroment for poorly equiped GM. Shifters are not for the faint of heart and represent alot of potential and power. Equally the GM should have suggested or encouraged that he try something else not so bold you might say. I belive the GM is somewhat more in the wrong in how they are handling things they feel are out of their control but the shifters player is not entirely innocent either. The GM is not prepared to handle high level characters. the player should compromise and play something more not so intimidating to such a GM.