Sorry to blow your bubble that it would never happen Chimbu & Frozo...
But it has actually happened and YES the Captain did keep his job.
Happened in the US, Capt refused to fly CEO due to safety reasons (almost pretty much what was said is a copy of the original post actually)...and in the interests of safety he was removed.
After all the following s*** shower that ensued, it was obvious of the angst that was caused by the said exec and how it was a safety concern.
But you are correct to say it would never happen at Jetstar...