I agree that being honest about what he is doing is for the best. There is no honor in lying to your own students. As for mixing up the different styles, I feel that the art will be weakend some. It may turn out to be a good street fighting style, but the art and the history will be diluted and/or non-existant. For some the art is not the important part...they are more concentrated on learning fighting techniques. So, it may be a good school....depending on what your looking for in a school, but I feel that someone should have far more years of training before starting any martial arts school...let alone creating a whole new style, IMHO. No matter how fast and powerful someone is, nothing can compensate for years of time and experience.
A man runs 3-4 miles per day, bragging about the extra 10 years of life it creates, unaware that he is spending them running.