An unfortunate tale of woe. Given your location, I suspect I may know the owner. And, while after you get to know him I don't think he really is an 'arse', I can't speak for his business tactics. But, I would have a hard time supporting the shop, given what you have described. I presume that the shop an hour away may be one of several to the south of you (across the border), and that the quarry you mention is also to the south.
You should do business where you feel most comfortable. If you change to shop B, and later run into the owner of shop A at the quarry, and he asks about it, be honest with him - 'I feel that I am a more valued customer at shop B, and the prices are simply much more competitive. I would love to do business locally, but I cannot justify the price differential.'
I wouldn't be concerned about the 147 foot incident - stories like that often get embellished a bit with frequent re-telling. And, the bragging part - if it is the individual I am thinking of - is just part of the personality, and is actually pretty harmless. But, as for taking DM with him, if he is the only instructor who teaches DM at shop A, I suspect you will not have a particularly good experience, just because of history - not so much an issue with the quality of training, simply the personality fit. If there is another instructor in that shop you could do DM with, and it is fully paid for as a union benefit (sounds like a good opportunity, actually), and it is something you want to do, I would not see a problem.
Ultimately, life is too short to do business where you don't feel comfortable. And, a LDS should be a place you enjoy visiting, if for no other reason than to just hang out and talk diving. I drive past a LDS about 20 minutes from my house, to go to one almost an hour away, on a regular (several times weekly) basis. It is just a better fit, for me. As several have said, an hour away is still local.