My perspective is a bit different, since I don't really have a situation where "Cut 'em loose" is viable (gaming with friends and friends of friends, in a house that multiple players share, and so forth) -- so the traditional ENWorld "Talk to him, and if that doesn't work, kick him out" method doesn't always seem realistic to me.
To walk a middle ground, this guy's going to have to give a little. He needs to trust your judgment. If that flap with the draconians is the norm, then he's going to be trouble, and you need to have it out with him -- let him know that you're perfectly within the rules as written, and you're tired of him second-guessing you because of his own insecurities. Now, on the other hand, if you've been playing fast and loose with the rules, then maybe there are situations in which he
did have a legitimate cause for concern. (ie, "I don't care what your skill is, that's just not going to work," in a situation where it working would have messed up the adventure; it's fine to do that, but for heaven's sake, lie about it more effectively.) The upshot
could be that he was rightly irritated once, and now doesn't trust you.
But tough. He has to trust you, or he has to leave. So he has to do that much.
On your end, you can tweak things to give his character a chance to shine. I don't know if you've ever watched Firefly. Look at Jayne. If Firefly were an RPG, Jayne might well be this guy's character -- a great combatant in a game that doesn't have quite enough combat for Jayne to shine in every episode. He's minmaxed for combat, whereas the other good shooters (Mal, Jasmine (er, forget her Firefly name)) had other skills. Jayne is pretty much a Fighter, or a Strong/Tough, or something like that. He likes hitting stuff, he gets bored if he can't hit stuff, and both Int and Cha were his dump stats. His utterly minmaxed in that regard.
So -- what Jayne needs in a roleplaying game is
Something to Fight. He needs something that is geared for him, something that's going to come after him in particular. He needs to appear threatening enough that people try to hit him first, or he needs to be motivated characterwise to protect other people in the party. So if the party is attacked by a wealthy nobleman with several orc warriors, a pixie who casts spells, and a gray render who is fixated on the pixie... the nobleman fences with the bard, the orc warriors fight with the other party combatants, the wizard or sorcerer trades blasts with the pixie, and the gray render takes on Jayne.

If the party is attacked by a bunch of rogues, most of them are human rogue3 folks with shortswords, and one of them is a tiefling barbarian/rogue with improved crit:rapier, a human-bane rapier, and some truly nasty poison. Guess which one goes after Jayne?
This isn't an attempt to kill him. This is an attempt to show him a good time. You don't artificially tweak things so that he never beats people by himself, but he should get both a solid combat
and a chance to show off his skills, cleaning up the mooks if the gray render falls or ignoring the tiefling's poison.
The one thing to watch out for with Jayne is instakill stuff. Jayne thrives on numbers in little increments. If he gets taken out by a single bad roll, he might complain that you had it in for his character, or that there was some bonus he should have gotten. Also, instakill monsters tend to be pretty weak, otherwise (although exceptions do exist), and what you really want is to give Jayne several good quality attack rounds per session, where he just gets to open up a can of whoopass on stuff and feel good about it. Then he should be a lot cooler with other people roleplaying the journey back to town or the discussion about the big plot.
If kicking him out isn't an option, compromises like this are probably the best way to go. Remember that, in-game, his character is a paragon, the ultimate warrior, even overshadowing his comrades. Bad guys are going to catch on. In real life, they'd either come up with tactics specifically to hinder him (which you should only do in moderation, since this is, while legal and even logical, not something this guy is likely to enjoy) or hire big bruisers to take him on (which is probably better as an option, in conjunction with occasional "Now, what do you do now that you've been disarmed?") stuff.