As someone who's ran games for a good number of years, I thought I'd chime in.
An inexperienced DM who leans heavily on another player isn't ever going to get the respect they deserve at the table, or ever truly feel like they're running their own game. So first order of business, is for the DM to learn his craft. He needs to hit the PHB and DMG, and understand the basics. Once he understands somewhat of what he's doing, it's time for a new basic game. I'd say only allow core books, and ideally just the handbook classes and feats. An inexperienced DM doesn't need to be dealing with advanced rules like Gestalts, or searching through 4 million different sourcebooks looking for an obscure feat.
What's needed is a simple, basic game that your DM can run and gain confidence in over time. He should keep homebrew stuff out of the game entirely, until he reaches a point where he can properly evaluate it's impact on the game. It's ultimately his say on what characters bring in, so he needs to learn to say no. Above all, both players and DM need to have patience. DM'ing a game is an art form, and it's not learned overnight.
If your DM is unwilling to put the time in to be able to properly run his own game, then there's not really much hope for him as a DM, and someone with enough backbone and confidence to say no to rules-lawyerish cheaty players should run. It sucks to have players in a group that you have to watch like a hawk, but sometimes you just have to go with who you have and try to make the best of it.
As a player, confronting another player about their cheating is almost never a good idea, and accomplishes nothing but raising tempers. Normally, I'd say let the DM handle it, as it's not a player's job to police the table. It's a good practice for a DM to look over everyone's sheet at least once a game, and asking for everyone's sheets to be left with him after games so he can look them over at his leisure between games is generally a good idea. However, if your DM is unwilling to do anything about it, then you're left with the choice of ignoring it and trying to have fun, or finding a new group to play with.
Good luck with whatever your group decides to do.