Horse apples!? Mark, I must say, in addition to the great knowledge you share, I often read your posts just for the comic relief.
Back to topic, while I don't agree with what he did, in my opinion, the other vendor isn't really the one you should be pissed at. It sounds to me like the client is the real weasel here. It doesn't matter how apologetic he was ... sometimes actions speak too loudly to hear apologies. That client sounds precisely the kind described in Ron Lindeboom's most excellent article "Clients or Grinders: Understanding the Three Market Types".
http://library.creativecow.net/articles/lindeboom_ron/clients_or_grinders.p...
I've noticed a definite trend of these kinds of issues exponentially increasing in recent years. From my own similar experiences, it really seems that, as times have gotten tougher for everyone, folks who normally hide their lack of scruples under a thin veil of friendly smiles and handshakes are just showing their true colors. I try to remain optimistic and tell myself that they aren't the majority, but many days that's a very hard sell.
I say leave the two love birds to live happily ever after and move on ... unless this is the one client that's keeping the doors of your business open, it's not worth the stress that clearly brought you to rant. I say forget about both the clowns, get off the puter, go have a glass of wine with your wife or girlfriend and tomorrow go find a couple new clients with whom you can have a healthy business relationship based on mutual respect and value.