It sounds then like he's the one that's stuck in the mindset of "people only want to hear the same old stuff." There's definitely a difference of opinion about direction and marketing here and it would be good (IMO) for the band to entertain the idea of trying newer stuff, as long as the newer stuff has audience appeal. Tons of deep cuts seldom work, but the occasional deep cut can emphasize your "wow factor" if the song is done well and still not so obscure as to be unrecognizable to all but a few.
So I do still think you all need to talk about this, but bear one thing in mind as you do. I mentioned this in a different thread about a different band yesterday. Most musicians in bands are not very good at marketing; they think they know what will work and gravitate toward doing the same old stuff because it doesn't feel risky, but in doing so they lose the opportunity to give the audience an experience they will remember and come back for. There are tons of bands in the middle of the pack and that's not where a successful band wants to be.
But, here's the thing. When you get someone in the band who is assuming a leadership role and isn't good at marketing, it's going to be difficult to get that person to change. He thinks he knows best, others may disagree, but it may not be easy to convince him to try anything new. In that case you and the rest will have to decide if this is the hill you want to die on. It sounds like you'd be happier starting a new band that would be interested in fresher material.
A note about horns; you don't need to have horns to play horn parts. I have a three piece instrumental trio and the guitarist and I cover horn parts all the time. But you do need to be creative with your instrumentation in order to do it. If someone's insisting the guitarist only play the funk chops the original guitarist plays, that doesn't give him room to cover what's missing, so yeah, that's a problem.
Wishing you good luck sorting this out.