What rules are the Imperial Potentate breaking? He has bent over backwards to resolve the situation (in Arkansas), peacefully. The Shrine only requires that Nobles be a MM in good standing. You can belong to a lodge in one state, and belong to a Shrine center in a different state. Since the GM of Masons in Arkansas has chosen to expel any Masons who participate in the Shrine from Arkansas Masonry, this seems like a good compromise.
1- The GM of Masons in Arkansas can declare the Shrine 'un-Masonic'.
2- The GM can expel any Arkansas Mason from Arkansas Masonry.
3- Masons can reside in Arkansas and belong to a lodge out of state. (I reside in Virginia, and belong to lodges in KY and Mass)
4- Arkansas Masons can also participate in the Shrine, and not be in violation of any Arkansas rules or edicts, since they are not Arkansas Masons.
Seems like a win-win-win for all concerned.