In 2) it depends on the 'attitude' of the Captain - here we appear to have one who wished to intimidate the F/O for whatever reason - perhaps the F/O was the world's best smart-arse and needed 'bringing down' - who knows? Once the C then 'loses the plot' the only option for the F/O is to take control, which would probably be strongly resisted but may well have enabled a climb away and an attempt at 'resolution' at a safe altitude. Sometimes the C in this situation will capitulate and thank the F/O and sensibly hand over control formally - that is, I think, the 'common' result in this 'uncommon' event.
...this guy obviously was partly "gone", maybe for medical reasons. So how to take over command from a guy who has partly lost it, but still wants to stay in charge?