Welcome, Shail.
Let's start with the bottom. How did your tile contractor build the shower receptor? That's the waterproof basin at the bottom of the shower, sometimes referred to as the shower pan.
Photos would be very helpful here.
1. Not necessarily. The CBU is required in the wet area of the shower, but that technically ends just above the pipe for the shower head. Drywall above that is fine.
2. While Custom does not (I don't think) list gypsum drywall as a suitable backing material for RedGard, from my personal experience I don't think it will do any harm in your application. See my warranty information below.
3. If he had properly installed a moisture barrier behind the CBU such that it draped over the receptor liner (presuming a traditional shower construction), there would be no need for the RedGard. But you were correct to eliminate the moisture barrier if you planned to use the direct bonded waterproofing membrane (your RedGard) on the inside face of the walls.
The small area above the shower head is not likely to suffer significantly from having both a moisture barrier and a waterproof membrane, but you're correct again that you should not do both as a rule.
4. I would be inclined to let him complete the tiling as is. While it may not be technically correct, it sounds like your most viable option given the obvious problem of an uninformed contractor.
Biggest question is how was the receptor built.
My opinion; worth price charged.