A potential collaborator and PhD student took a commanding tone with me (faculty) – how should I react?
While your, I hope preliminary, assessment of the student as having a superiority complex may be correct, I think you might want to consider another option. 

It may be that the student was told to try to impress you that he isn't the dumbest rock in the pile and so laid it on thicker than normal. It might be hard for a normal student to find an appropriate balance if he is new to this. 

Since you indicate that there would be advantages from an association with his advisor, you might want to withhold judgement until you know and observe more. One think you might want to pursue is a talk with the advisor and work in the question "Is he always like that?". You might get some insight on how the student normally behaves that might make you more or less willing to take on the task. Of course, you might also learn that the student has, indeed, thought hard and deeply about the issues before approaching you. It isn't always easy to work with a truly brilliant student, but there is something to be learned from it. 

If you have won a Fields Medal (mathematics) but come up against a student who makes you feel small it can be quite a shock. (Movie Reference: Good Will Hunting)

True enough that some people play dominance games, of course.