Adrianne, how carefully have they assessed him for Pervasive Developmental Disorder (PDD)? Because what you describe sounds classic, to me. They have an insistence on rules being followed, only these are the rules which they have managed to work out in their own heads, from what they observe. These kids tend to experiment with human behaviour (because otherwise they can't understand it) and will treat us like laboratory rats. "If I push Button A, consequence C will happen every time," is the way their minds work.
You can make this work to your advantage - difficult child 1 is now extremely law-abiding and scrupulously honest. It wasn't always this way.
Part of this desperate need for everybody to respond each according to our own programming, is a desperate need to be able to predict what will happen and how people will react. Also part of it - everybody must react the way he would. Even the dog.
I've told the story before about difficult child 3 reading a book to a six month old baby - he asked the baby to choose which book he would read and held up two books so the baby could point to one. He took a flailing arm as indication of choice and began to read. He would stop every so often to try to engage the baby in the story, to get "audience response".
"Now, baby - what do you think will happen next?"
He was assuming that the baby's thought processes and level of understanding were a match to his own.
Another example - a young friend of ours, daughter of a therapist we see often, is ten years old and very bright. When difficult child 3 first met her he was ten years old and she was six. He said to her mother, "Is she autistic?"
The mother, rather taken aback that her beloved, treasured only child could be considered anything other than perfect, asked him why he thought she was autistic.
"She's very bright," difficult child 3 said. In his world, a lot of very smart people are also autistic.
Conversely, this young girl said to her mother, "Why is difficult child 3 your client? He seems perfectly OK to me. He's very smart though, isn't he?"
Marg