Wow, the first time I read about someone else doing my style, they desricbe the same problems my dojo was having. My first sensei, too, was a dick. Here in Germany, most sports are organised in a very non-profit way as pats of "Sportvereine" that offer a great variety of sports. As a trainer you can't make money with that. You get a compensation but it will always be a hobby, never a job, which is why my first sensei left us. He started a dojo that was not connected to a Sportvereine and took a lot more money. It was also almost an hour away from where we'd been training before. Our now highest ranking teachers were two green belts (3rd kuyu) and the only two adults. We were basically done. We could not do gradings like that and had never been part of a bigger organisation.
And here's where the story becomes relevant for you, because we survived and I'm on my way to be our second back belt after he left. So I might have some insight in what you could do to get your ranks recognised and start the kind of dojo I would love to see more often. Or not. Depends on what you want.
We went looking for other, closely related dojos and found one where they did almost the same style, we did. Some of their trainers had trained with or under our old sensei and knew him and his "quirks". So we started training with them and doing joined gradings. They were part of a bigger organisation of dojos that recognised all gradings done by member dojos. With our first grading in their organisation our new sensei approved all our old ranks. We gave him our documentation that said how many forms and stances we were supposed to know until then and he took the time to ckeck it all. That was the longest most repetitive grading I've ever done and it was only my 4th kuyu. My 1st kuyu was a lot less tiresome. So be aware that if you plan on getting everything reapproved it will take time, work and willpower to explain every move you make for a while. I'd advise you pick a sensei that is part of an organisation so that your documentation will never again be gone. You should also be aware that my new sensei put in a lot of time and effort, especially when looking at forms and stances he did not know himself. Finding someone who will do this might be hard. But if your old sensei was not as much of a hermit as mine and went to competitions or the like and people have met him and know what he thought that will surely help. Your experience in training will also help you show others the specific things your style does.
To get on with my story, after about 7 years, my current sensei (one of the original green belts) got his black belt and we were faced with the choice of staying or leaving and being on our own again. We decided to stay. We still only do joined gradings and my sensei and I train with the other dojo almost every week in adittion to our own. This brings me to my second point. While you could start your own dojo and be independent to do all teaching and grading on your own that might get your students into similar situations if they ever feel like they would not want to train with you anymore. I could train under 5 different senseis on 4 days a week in 3 locations, because we work with two other dojos. And this is just the adults. By now, I think this is how it should be. The man who reapproved my old belts acts like a sensei for all of us (he never took one of the higher titles because he does not like to make our interactions overly formal and never cared about titles anyways) and then every dojos has their own senseis and senpais who train different, open groups where everyone might join. We often get people from other styles that did no longer feel at home with their dojos or outgrew them and I love learning about all the things they do different than me. Nobody has ever been forced to give up their old styles and a lot of us do some unique katas when we get time to ourselves and as someone who loves kata I enjoy helping others work on stuff that I don't do myself.
So, what I'm trying to say is: try to be part of something bigger and allow your students to experience something else than what happened to you. Make karate something more flexible that you can do in every chapter of your life without having to go out and restart from scratch. Make it so that not agreeing with one guy in your dojo does no longer mean you need to leave your roots so that your students will not face the same problems you are facing now. On my last note, don't hunt your old sensei's roots. Find someone who'll gladly give you theirs. And then treat everything you old sensei gave you as an adittion to that. Some lines of philosophy die out because somebody picked a bad sccessor. Looks like that already happened in your line. It sure did in mine.