The FAA has the legal authority to perform a 44709 reexamination of anything for which they issue a certificate. That can be an airworthiness certificate, a repair station certificate, or a pilot certificate.
However, while they have the legal authority to do so, their policy is to not perform a reexamination unless there is a question regarding the certificate holder's fitness to hold the certificate. More specifically, as relates to this matter, it is also the FAA's policy
NOT to use a 44709 reexamination in lieu of an enforcement. A 44709 may accompany an enforcement, but it cannot be used as a punishment tool. So, if the inspector thought the aircraft was unairworthy, he could properly do a 44709 reexamination of the airworthiness certificate, but by policy, he could not do a reexamination of the pilot unless he also did an enforcement of the pilot.
Any inspector who follows through on the threat he made would be way off base. It just doesn't happen. Management wouldn't support his actions and he cannot do it without management approval. Also, any inspector who interfaces with people in a manner attributed to this inspector would also be way off base.
However, there are always two sides to every story. I would want to hear the words out of the inspector's mouth before I would believe that was what was said. Tales of encounters with the FAA have a mysterious way of becoming highly embellished in the retelling.
If the airman who states he was treated in such a manner wants to take positive action, he should contact FAA management. Personally, I would suggest writing to the Region level. You can find the address for the offices here. I would recommend writing to the Regional Administrator. Just present the facts and state that you feel that is an inappropriate manner for dealing with the public and would like to know if he supports that type of behavior.
http://www.faa.gov/about/office_org/headquarters_offices/arp/regional_offices/