I think you should always
come across as polite, courteous and friendly - but personally I have no problem with engineering something that, without the others knowing, lands the Rude looking even more of a fool - like your palming of his key card, which I think was quite funny

Harry Robson mentions a situation in which a young upstart basically thrust a deck under his nose and demanded he prove himself with a trick - he did his version of torn and restored which destroys two cards - I hope the lad learned his lesson (they were probably "Guardians" or something

)
But frankly, if they've interrupted and their magic is not as impressive as yours (it's usually not), they'll already be looking a fool.
I think the problem comes when you're doing magic for obviously quite a close-knit group, and there is one guy who's obviously the group joker/clown, who everyone else thinks is "a right old laugh - Dave's just crazy!" - sure you know the sort. You might then find that even if your magic is better, because they know this fellow, no one seems to mind him being rude, and they may well all find it hilarious watching him @rse around. In this situation, just smile and make your exit.
But overall, do remember - if you can get them on your side, with a spec as magician trick or something, just like the naughty kid in class you'll have someone who is going to rave about you and buy you drinks all night.
Edit: way to drop the C-bomb on TalkMagic, Agecroft 