Nathan, I'm not an instructor but I was once a student and I think that of the things my instructor told me to do, the ones that I most paid attention to where the ones he told me while on the ground not flying. He'd look at me and try to get me to understand the importance of each of his indications while making me aware of the possible setbacks there could be if I disregarded his pointers. Then on the air he'd tell me to remember what he had just pointed because one tends to freak out and forget everything once airborne. At the end of the day he suggested that I try to do mental exercises of the things we had gone over. I specifically remember leveling the plane when its coming towards you. The classic "point the stick towards the lower side", and he told me to imagine the situation over and over again and try to think of what I'd do. This turned out to be crucial. Maybe if you try this approach and tell your student to think about larger swift stick movements as he pictures the plane's response, over and over again, it might do the trick.

You could also try to get him to set his sim to a less responsive setup so the gets the idea of the real deal. The idea of giving him positive expo on the real situation seems wrong as he will get used to the Tx correcting his bad habit instead of flying the plane correctly. In the end you could just get him to uninstall that darn sim

Just my 2 cents.