Sounds like this guy is real loser big time in multiple ways. He is going to cross the wrong guy one day and then his whole life will be over in a blazing headline in the papers. But right now he's gunning for you so you have to deal with it.
Your best plan as I see it: I agree with Terminator avoid the fight as best you can. This is not being a coward, this is being smart. You have nothing to gain. It's a manhood thing for him that's why he wants a fight. If you were to win in a fight against him I would suspect he would come back at you with several guys or with a weapon next time. So don't fight unless you have no choice. I'm surprised no one has said this but what's your guarantee he doesn't have a weapon already and waiting to use it? Also, let's say you get game and take him to the ground and pummel him. what's to stop his friends from equalizing it while you're vulnerable? Bad news no matte how you slice it. People have said it here: no such thing as a fair fight so expect anything. So avoid this thing if you can.
I would go and get a restraining order against him. Go speak with a lawyer if you have to. Sue him if he continues to threaten you. This is 2003 and there is no sense in anyone having to put up with this kind of nonsense. But you must document everything that has happened up to this point. If you don't then it could come back to haunt you if something bad ever happened. Make sure someone knows that this is happening. Don't be a willing victim or statistic.
Probably wouldn't hur to make some new friends who know how to fight and look out for each other in the meanwhile.
Good luck.