I think that's a good general approach, but his frame of reference appears to be such that I've got to marshal some significant arguments to a potential "No Bedwyr. I know how this works and you are incorrect. I'll be kind to you and say that you can put the characters in later if that helps but those *are* my characters and they should be part of the story." Note that's a prediction based on what he said earlier and where I *think* his thinking is going not what he's already said. So besides banging my head against the wall, I'm sensing a need to work through some really strong assumptions.
A player who would waste a week of time making a group of NPC's before checkin in with the GM raises all sorts of 'problem player' red flags.
There should be no argument here. Do you really see that actual reponse coming from him? A player does not dicate to the GM. He does not get to determine the story outside of the action of his characters. Rule 1. If you wish to be less confrontational, you can bring it up in a group session. make it clear that you might consider players requests and input, the campaigns background and metaplot is something you have worked on and have a progress plan for, and there's only so much room for other material, and only so much time you have to spend managing any changes or additions beyond what you have already planned. But in the end, your decision is final. If they are cool with it, then play on. If not, then tell someone else to GM. If he's the only one with a prpoblem, he can deal, or he can find something else to do.
If he can't understand the basic Player/GM dynamic, he'll never last long in any group anyway, or you won't last long as a GM. Running the game can't become a pain to you; and if he won't yield to reasonable roles and compromises expected of players, he can choose not to play. Don't feel you have to accomodate him. You've made a reasonable stand fully within the normal expectatiosn of a gaming group.
I highly reccomend not giving in on this issue: this sounds like a 'give an inch and he'll take a mile' type player, and not look at any compromise on your part as a exchange, but for a license from him to try and dominate the game with mary sue-ism or simply loads of details focused on him that no others player frankly will care about.
If he persists, then its a flat "When you run a game, you can add characters as you wish. Sorry, but those characters/that plotline does not fit into my campaign, therefore it won't happen at this time."
They are not his characters. Players control one character in the universe, and the NPC's are yours. Having him create the NPC's completely, and try to dictate the story is not going to work: how will the other players fele about this? How will he not act off of his superior knowledge of the NPCs and situation? And will he start arguing that 'No, they wouldnt do that" once the game started and you used them? I'm thinking he would.
Even if you found a use for them (and I have taken player ideas in the past), they shoud not be introduced as he has written them. You'ld almost be obligated to rewrite them, change them, and alter the story to better fit your campaign, and also keep the story fresh for him as a player, and to take away his ability to rely on meta-knowledge.
After all I'm supposed to be the facilitator of the fun and if me stopping that is getting in the way of fun I should bend.
They have to bend as well. You are the one who has taken on the often thankless job of being GM. You do the liosn share of the real work, you make the major decisions. Of course there is a give and take in a basic decision on game system, genre, setting, power level and tone that usually happens before campaign, but after that, you are the GM. Part of the compensation of being the GM is not being forced to run what you don't want, or constantly abandon or rework your plans because of another 'great idea' which most likely is incompatible with your original direction. There's only room for one GM at the head of a table for a particular game. Now sure, you can have a shared universe, with GM's rotating out or running differnt groups in the same world, but that involves negptiations and cooperation on a GM to GM basis, not GM to player.
