Just my thoughts, what should i do? He doesn't seem to be joking. I think he is over obsessed with his tough guy image and he needs to soften up abit.
Firstly, while he might not have been entirely joking, he may have
had no intention of actually doing it. . .he just likes entertaining
the notion.
As to what I think you should do:
Just let your instructor know (privately, of course). I'm sure he
has met the type before. . .everyone has. Giving your instructor
a bit of warning that it may happen will allow him to better decide
how to deal with it. Being put on the spot by a surprise challenge
does not lend itself to formulating a well reasoned response.
(Besides, you bringing up the issue might also give your instructor
the opportunity to explain to you and your fellow students how
he expects you to view "tough guys".)
And don't worry too much that your friend's attitude will reflect
badly on you in your instructor's eyes. Everyone at one time
or another has had a friend make an *** of themself. The fact
that you show concern now for his loutish attitude may look
better for you than trying to publicly dissociate yourself from
him afterwards, if he does make the challenge.
If there is a challenge, your TKD instructor will probably want
to know who your friend's karate instructor is, so they can
discuss what to do about him. I think it would be rare for
an instructor of just about any martial art (including the
various forms of karate and TKD) to be pleased that one of
their own students was behaving that way. The sentiments
underlying our Five Tenets are hardly unique to TKD.
Dan