This sounds like a good time for Cedric's advice on "What to do when your best friend's are relentless Munchkin's".
Believe me...I've been there. It starts pretty simple, take a level of paladin for the saves and bonuses, then change and go monk for the rest of your career. Write it off with a roleplaying excuse.
But pretty soon, a few years later, you are a half-fiend, half-dragon, half-troll, Ogre Magi, Death Knight of Krynn. And you somehow string together enough loopholes in the rules to make this fly..on paper. Then what are you left with?
Something about as attractive to the rest of your friends as Fly Paper.
So what do you do? In the end...I say live with it. The GM is going to have to put his foot down to keep it under control. But the GM shouldn't try to stop it all together. Because this guy is your friend...and you don't want to lose that friendship.
When you put your foot down as a GM. Try not to do it that often and when pressed for an answer. Just say, I don't really want something like that in my campaign. As a GM, I'm not comfortable with it.
Is this going to keep the munchkin in check forever? Are they going to stop their power gaming ways? Of course not, but with a few checks and balances here and there it can be kept under control to the point where everyone has fun.
Note that with this method, it may be necessary as a GM to throw in some smackdown of your own.
I recommend something small, fast and deadly with a sword. Just make sure that the something small, fast and deadly is in an Anti-Magic Shell when you throw him at the munchkin giant mage.
Cedric