The goal of the tactics below is to inform the GM what behaviours produce a good enjoyable game for all (point 2), what behaviours they should adjust (point 3), as well as (point 1) to try to make them aware of the fact that they have a different role at the table as the GM (as judge, as arbiter of fair, and as the interpreter and controller or rules) in addition to the role they had as a player (to have fun, to try to not ruin the fun of others)

It's unclear from the description if this person is new to GMing or not. This may be a case of the person GMing in the only manner they know how to play. This will be easier if that is the case, but even if not, my approach in this scenario is to use all of the following:

1) "Catch him in the act" ... When an attack roll that used to miss now hits, ask why. Accept the answer, but make sure to question every time. The idea here is to make the GM know that they are expected to play by rules (for the purpose of asking that the GM follow rules, what actual rules doesn't matter, just that they need to play by some rules).

2) Reinforcing (positive) Feedback ... When there is an encounter that runs right, talk it up. Say how fun it was. Say how tense it was. Point out swings that appear to happen naturally and how they produce story. The goal here is obvious - to encourage more of the good stuff.

3) Adjusting Feedback ... (which it sounds like you are at least attempting) When things are not right, tell the GM - after the fact is fine - you're not out to embarrass or insult, but to get the GM to be better next session - but make sure to say both why the encounter was not as fun as it could have been (the on-the-fly adjustments made it feel like deus ex machina, rather than real tension, with a real chance of failure) AND most importantly, what would have made it better (if the uber-whip-dude had been a little less tough, the start of the fight would have been easier, but the end of the fight would have been a tense touch and go affair)

You're not having fun.

Since the entire point of role-playing is to have fun, you need to do something about it. In particular, it sounds like the character he's playing (called a GMPC) is seriously distracting him from his GM task of running a fun story for the other players at the table.

You have several options, depending on whether you're willing to accept him as a GM as long as he changes, or if you can accept him as a part of the group as long as he isn't GMing:

1. Talk to the GM about his behavior. Try to be non-confrontational, and don't have this conversation in front of the group; that will just make him defensive and won't accomplish anything. Try persuading him to not bring a character along with the group; he's GMing, not playing.
2. Sit out the current game, until the GM is done. There's no need for you to continue playing a game you dislike, so take a break until he's done running the game. Then join the next game, that someone else in the group will run.
3. Take over GMing duties, with the support of the rest of the group. Since they already asked you to be the GM, they'll almost certainly be willing to let you run the game. Talk to the other players about this individually before you try this; if you have enough support, you'll be able to usurp his position as GM, and start an entirely different game. Perhaps the current GM will be a better player than they are a GM. And look on the bright side: you now have some fantastic examples of how not to GM, which will make you much better at this new role! You can also combine this with #2 above: sit out the game until it's over, then be the next GM. (Warning: given what you've described of his personality, the current GM is unlikely to take this well.)
4. Start a separate gaming group, inviting whoever is willing to play without the problem GM. If some people are unwilling to play with the new group because they don't want to exclude the current GM, then you'll need to exclude them as well. Recruit a few other players from elsewhere if you need to.
5. Find a new gaming group. If all else fails, just don't play with this group at all. If they're willing to play with someone they dislike, and you can't persuade them to kick out a problem GM, that's their problem. It doesn't have to be your problem.

Note that none of these options include playing a game you dislike with a GM who you hate. He isn't going to improve on his own, unless you talk him into changing or encourage the group to leave him behind.

On a slight tangent, see the Geek Social Fallacies. It sounds like some of the members of the gaming group are suffering from GSF #1: "Don't exclude anyone" and GSF #5: "Failing to invite someone is a deliberate snub."