As commented by Rent_THB below, it may be a little unclear why I would chose such drastic consequences for the party. Let me explain:
- I'm assuming that the DM has already talked to the problematic player but for whatever reason it didn't work. The player didn't stop his behavior and for some reason or another the DM can't simply throw him out of the gaming group [right now].
- Avoid getting into a "player-vs-DM" fight. By making it the whole group's problem you not only show that you don't play favorites but also communicate that the group as a whole is responsible for what happens at the table. And peer pressure works remarkably well in the military, at work and in school to keep trouble makers in line so I can't see a reason why it shouldn't work at the gaming table.
- Don't do a "reset" or "dream sequence" or something like that. It's a direct way to Railroadland and sends the message that if the players do anything the DM didn't want or like to happen he is willing to invalidate their actions and efforts to get the game "back on track". Let the group live with the consequences of their actions - for good and for bad.
The problem with throwing high-level NPCs at the PC is that it is contrary to what the default assumptions of the world are. Unless you're dealing with Forgotten Realms or Dark Sun the chances are very good that the PCs are the highest level characters in the city (and even in FR or DS you'd have to be in a major and important city to find high[er]-level NPCs). If there's suddenly a level 30 paladin in town to beat up the mass-murdering PC it begs the question why said level 30 paladin wasn't around to stop the orc attack the PCs had to deal with in the last adventure.
The solution to the problem is simple: end the campaign.
Trying to get the PC under control in-game merely gives the player a stage where he can act out his disruptive actions. Don't allow the player to hog the spotlight even more and simply derive him of any way to use his PC again. Tell the players that the rampage killed an NPC that was central to the plot and that there's no way for the PCs to finish the campaign (this may even be the truth).
It's a sort of "rocks fall, everyone dies" but if the player can't see why his actions are disruptive then you shouldn't waste your time trying to babysit him. If the other players enjoyed the campaign the resulting peer pressure should keep the player in line in the next campaign.
If you still want to solve the problem in-game: let them feel the consequences.
Even when the PCs are the highest-level characters around there's still consequences, since the PCs can't do everything on their own. They want to buy a ritual or need a ritual to be cast on their behalf? Too bad they killed the only ritualist in town. They want a special weapon/implement enhancement? Too bad they killed the only weaponsmith on this continent capable of creating it. They need information about a certain monster/organization/NPC? Too bad they killed the only sage in town. If one of the PCs (not necessarily the mass-murderer) dies and needs to be rezzed? Well, too bad the Raven Queen is in a bad mood because of the mass-slaughter and prevents the resurrection.
Also, there's no reasonable way that the PC (or the group, if they helped him in any way during the massacre) were supported or trusted in the game world ever again (rumors, gossip and bad news spread quickly, after all...). They'd face the same stigma that convicted murderers and rapists have in our world.