Ah, I know that sort of DM PC. Had a GM who would do that in any tabletop we played under him. We stopped playing with him after the exalted campaign resulted in our characters being helpless, unconscious, imprisoned or otherwise useless all the time. Quit playing under him, that is the only real route if he's out and out told you to "shut up" when you brought up the subject.

That said, DMPCs aren't always a detriment. Talanic's paladin is a good example. it's probably not hogging the spotlight, fills a party role, and if the players don't mind him, so be it.