Treevet,
I'm NOT a pro in your industry, but I do have tons of experience working for a manufacturer managing the distributor channel and I've been on the other side of things managing a distributor and having to deal with the manufacturer. In my industry manufacturers began horning into the service part of the business, the equivalent of your supplier horning into your business as a possible competitor.
I've seen the situation you describe so many times that I would have no way of counting them. You have most definitely gotten the dirty end of the stick on this one and there's not much you can do about it.
I sense from what you wrote that you are a seasoned guy that knows how to do business with people. That is your biggest asset in this situation. The owner of this supplier that did this to you in all likelihood does not realize that he is now seen as a competitor by his own customers, you being one of them.
I am not there and don't know the details of your relationship, but I think that the best thing you can do is to ask him for a few minutes and meet with him behind closed doors. Explain to him in very polite and professional terms that with his new relationship you now see him as a competitor and that he should not be surprised if you try to find alternative sources for supplies and equipment. Be prepared for his denial of competing whether or not he really is doing so. End the meeting by leaving the door open by making it clear that you've enjoyed doing business with him and hopefully the situation will change and we can pick up where we left off.
If you feel that he has and continues to push business your way, then this obviously would not be the thing to do. Your idea of having a few individuals that you trust, call him and ask for referrals is a very good one, but if he ever learns that this has happened it could be really bad for you so be careful who does this for you.
In almost all cases where I've seen this happen, the established service business tends to come out ahead in the end because the manufacturer or in your case this supplier, never seems to have the people with the experience and work quality of the old established firms.
I believe that if you continue with good service to your existing customer base, word of mouth will trump whatever advantage this guys "renter" might have.
Hang in there and I hope this helps,
Doc