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Greetings, all.

I've been a lurker on this forum for a while, but now I have a situation that I need advice on, and I'd be most grateful if one of your Pathfinder/D&D veterans can supply said advice.

I am DM-ing a Pathfinder game and one of my experienced players - with some pronounced munchkin/rules lawyer-ish tendencies - has created a character which, in my opinion, is rather overpowered. Specifically, he created a Halfling Rogue with optimized levels of Stealth (over +20 to Stealth at level 3, from various feats, items, the Small size bonus etc. and this is only likely to rise even more once he gets access to more gold and feats). He created this character after his Halfling Wizard was killed, ostensibly to ensure that it doesn't happen again. Now, being a newbie at DM-ing D&D in general, I allowed him to roll up this Rogue, which I'm beginning to regret.

His typical strategy with this character involves either beginning every encounter already in Stealth, or stealthing as soon as the opportunity presents itself - he's never far from cover, and he prefers to spend as much time as possible in trees or bushes (the campaign features a lot of forest terrain, so he's rarely wanting for cover). He then starts sniping every enemy in range, repositioning himself through cover as necessary. He took the alternate Racial trait that Halflings have available, "Swift as Shadows", which lets him reduce the penalty for using Stealth while moving by 5, and the Stealth check penalty for sniping by 10 (so it's now -10, instead of -20... there's also a Rogue talent that does this, but it's available much later). Thanks to his optimized Stealth skill, CR appropriate enemies have little chance to detect him even as he pokes them full of arrows (he essentially has to roll close to a 1 for enemies to spot him), and he argues that since the enemies haven't spotted him, they shouldn't get their Dex bonus to AC versus his attacks, and therefore he should also be able to get his Sneak Attack bonus every round. The other experienced players haven't contradicted him on this, or anything else Stealth related for that matter, and the opinions on how Stealth and Sneak Attack ought to work seem to be sharply divided even on this forum - I may be stirring up the hornet's nest again, but that can't be helped...

To make matters worse, he's also taunting with his intentions to take even more Stealth related items and feats - for example, he plans on taking "Hellcat Stealth" - or a level of Shadowdancer - so he can enter Stealth even while directly observed, and he plans on making use of Invisibility spells and effects as well to make himself even harder to detect.

I'm doing my best to be reasonable and understanding, but I fear his powergaming tactics are taking a lot out of the game, as the player of a character that virtually can't be detected is unlikely to be threatened by anything short of some rather contrived situations, such as having every enemy spellcaster come equipped with Glitterdust, or having a dragon burn half the forest down to get him out of his hidey-hole (and even then, he has Evasion!).

Am I misinterpreting the rules and letting him get away with murder (usually literally)? Or is he right in apparently believing that Stealth at extreme levels really does equal near invincibility? I told him that I need to take his character under advisement, but I can't seem to be able to find a satisfactory, and fair, solution thus far. Or am I merely blowing things way out of proportion, and a nigh-undetectable Rogue isn't really that big of a deal in the long run? I don't want to have to resort to house rules unless it's absolutely necessary, especially not to nerf someone's legitimate character - but if he ends up ruining the game for everyone, I may just have to do so.

I've also considered letting him have a taste of his own poison if nothing else solves this problem, and having some Rogue snipers/Assassins built using the same rules ambush the party (the plot definitely allows for this eventuality), and see how they like being the target of undetectable attackers that get sneak attack damage every round - but this is another one of those "last resort" type of situations, as I don't want to end up being vindictive over this.

Any sage advice will be most appreciated, and I would like to thank you all for reading through this post and taking the time to answer!