Backstory
We had a new player join us mid campaign and he made an eccentric Dragonborn character. The character joined a group of a rather ignorant elf and human who were already at odds with each other and throwing flak at each other in jest.
Now the three of us started bickering, but what we didn't notice is the player of the Dragonborn was getting really upset. Either we missed it, or were just ignorant, but after 2 months, he decided that he wanted to quit which caught us all off guard. We decided to work with him and said that we would no longer poke any fun at his character in character or out of character.
Aftermath
We all feel like there is this awkward 'watch what we say around him', but this isn't really the problem. The problem is this campaign is coming to a close and we're planning our next characters. Everything he talks about is how he is going to create a character that won't take flak from no one. At the first sign of someone making him upset he's going to attack them.
Everyone of course says that this isn't a good idea, but the dude just wants meta-game. The DM doesn't want the player to try and take over the campaign or cause unneeded stalling with inter-party fights due to a slight, and has expressed this to all of us, but he believes that ultimately it's up to the party to handle issues as they come up and is wanting them to come up before he will take any action.
The DM explained his stance:
My issue is that I will do what he wants. I'm just the advisor. I will not stop him, and it's not that I won't have any of it- But I would much prefer he doesn't make a character that hampers the general fun levels of the campaign, merely because he can't take light banter and weak insults. Ultimately the outcome is up to you guys - As a DM, it is not my place to tell someone to or not to do something, but I will absolutely make recommendations if I think its unreasonable. I would be doing everyone a disservice is I stood in the way of someone's desires for a character.
We want him to join us in this next campaign because he's a good friend, but it feels like no one is really looking forward to the next campaign anymore. I personally don't want to risk this campaign ending a couple sessions in right after starting. If we let him do what he wants to his heart’s content, fighting back will probably cause him to threaten to quit again, and kicking him out will cause strain on our friendship.
TL;DR
Player is upset that his character was made fun of last campaign, we stopped doing so, he's still planning on meta gaming and starting PvP in a new campaign if anything doesn't go his way.
What can we do to reduce this, or is it best to just abandon ship?