Goodluck in getting the letter. He should at least be courteous enough to get this to you. You may want to let him know, in a nice fashion (which he doesn't deserve) that if he provides you with the letter you will drop the rest of the matter and he will not hear back from. Don't say "and if you don't, I will sue you"...let that remain an open threat. He may just provide you with the letter to get you off his back.
If not, see if the dive shop will accept the log books, or let you take the test and show that you know the stuff. The most important portions, the water tests, they are requiring you to do anyhow.
I would definitely report him to whatever dive association he uses...while he may not have violated safety practices, he has violated ethical/professional practices. Especially if you write a great letter to that association, they may get annoyed with this guy and strike him from their list of recommended instructors (or some such thing). It may work, it may not. If it doesn't then you can tell that association "Great, you certify your instructors, but when they rip off customers who are also YOUR customers, you don't provide support? OK, well my friends were gonna go with your association, but I am going to tell them to go with your competitor". Nobody likes a bad rap.
As for things like sueing the guy...for $150? You are entering a very expensive hobby/sport, and as such you have some kind of disposable income...is $150 really worth your time? For principal, sure, but for just the money???
I would just fill out a lot of online type surveys and give this guy a bad rap. Also post his name and dive shop name and locale. I find it interesting that he contacted everyone except you. I'd wager he may have not contacted anyone but just fed you that line to pass the blame.
My thoughts.
