I will try to answer most of your questions... First of all I tested for 4th Dan with my old instructor 20 years ago. I left him after 5th Dan partly because of his getting greedy and party because he was supporting what I would deem a child molester in opening another school.
First: He charged that much, and still does to those that are still with him, because he made us all believe that it was the norm and that a Kukkiwon was hard to get and we were "lucky" that we were one of the only ones in the states getting them.
Second: We did not bring in anyone else for that test. I did test in front of GM Byung Jik Ro for first dan when he came over from Korea.
Third: No parties, no special privileges, just spent a lot of money on something that should not have cost that much. Basically he has made a career out of taking advantage of us in ND. He is able to do this mainly because he kept us isolated from anyone else.
A side note... after I left him he began promoting his instructors to black belts in Hopkido and Kumdo on weekend seminars that he charged $1500 for. And of course everyone passed and received a black belt.