Your lament is common. It's difficult to make money teaching martial arts and especially difficult to have a successful school. At your age you are quite accomplished and I think the direction you are heading is a smart one for you.
Most of us like you said are not in this for the money, it's a labor of love.
I think students respond to older teachers often times, it isn't fair but it's true. The good and bad news is, you will get older.
I have found in the past that schools in small towns often do better than schools in larger towns. I think at some point you become one of the things available to do! Cities have many different oppurtunities but small towns are limited. Sometimes the local martial arts school is the only act in town.
Where it backfires is if you have a small town with several schools, such as yours. It might pay dividends to join forces with the other Tae Kwon Do school and share the wealth.
You gain from his perceived age/experience/maturity and large student base. He gains from your legitimacy and affiliations. It could work if everybody can function without ego.