After all the wonderful and supportive advice, I thought I'd update our tale, and perhaps there's more you can help me with. I spent the whole night thinking about this. Again. Lol :)
I have a dentist booked, but not for another week yet, so still waiting to find out about Matty's teeth.
We swapped the bit for a 1/2 inch smaller, and it's much better. No head throwing in the couple times he had it in. Also have a new bridle with noseband and flash, but I haven't used the flash yet (there's a story to that, but maybe not now...)
My daughter rode him in a dressage test on weds, and it was hideous! Well, I say that because we had no idea where in the test she was as he was all over the show, weaving, stopping, starting. Lol. But as a Mikayla/Matty ride it was brilliant because he was trying all these evasive strategies with her so he didn't have to listen, and, with the back up of a grass reign, she wouldn't have a bar of it and pushed him through. I was so proud of her. I could see steam coming out her ears though!
So yesterday being Thursday, we had jacked up a lesson. The instructor is a natural horsemanship trainer, not pony club. That made a huge difference. She prefers horses being bitless, but in this case she said he needs a bit.
Here's what I saw: The best ride ever. Over an hour, and Mikayla had Matty walking, circling, one-reign stops and trotting on a straight line. It was hard work, but she learnt so much and found some easy solutions to her hassles (not to say they are now fixed, it's just that we know how to work on them over the long haul).
Here's what the instructor said: Being a standard bred, he possibly has not been restarted properly. She said he is numb to certain aids, and hasn't learnt them properly yet. In her opinion, Mikayla could maybe get him going nicely, but it will take a long time, and it might be so hard for her that she gives up.
So we have some options. 1.) Sell him or return him to where he came
2.) keep plodding on with lessons
3.) send him away to be restarted and then see how he is when he returns and then revisit options 1 & 2
I think it would be easy if he wasn't so full of character and we hadn't gotten so attached to him! I'll be on the phone a bit today, I think.