I say stick with any student who struggles, you are paid to teach and pass your evaluations after each lesson. If you explain to the student that their progress is below that of an average student and highlight how this will cost them more than perhaps initially planned then they can then make their own mind up. It is never for us to say "YOU should not be flying". If you tell them to quit they'll only go to the school down the road and start over again. Might as well hold on to the custom. Most instructors who attempt to put students off are only doing so for an easy life.
I have had my quota of nutty types, same as most other instructors and I won't pretend I enjoyed it. Some unwittingly gambled with my sense of safety and drove me to the sanctity of a large pint at close of business. My lesson learned is to just keep it simple and certainly keep it dual until the moment comes... if indeed it ever does. Oh, and don't let things get to the stage whereby you rely on your superior flying skills to get you out of situations that could've been avoided by your superior judgement! If it means evercise 6 for ten lessons then so be it - you decided to become an instructor so lump it and work harder to solve the problem.
VFE.