So much to cover...
First of all, why is it so hard to imagine that he paid for all his own stuff? At 18 (I'm 25 now), I had paid for everything I owned (other than birthday and X-mas gifts). This included ALL my clothes, my study desk, my bed (I bought a nice waterbed), super nintendo, gameboy, shoes, and my first computer (DELL). I paid for my own car and insurance. I even paid for my own meals. I made $6/hr at a grocery store and mowed yards. I never was given an allowance.
I think that an 18 year old living with the parents should be given greater latitude in his/her decision making. It shouldn't be the business of the parents if you are out late, where you stay, or what you do outside the house UNLESS it is directly affecting them. Inside the house, however, is another story. They reign supreme, especially on topics such as drugs, alcohol, partying in the house, being rude/rowdy, etc.
Luckily, my parents knew they could trust me. I was allowed to make my own decisions. I think I turned out OK. If my parents would've EVER told me at age >17 that I couldn't go somewhere, I would've told them to piss up a rope, and I would've moved out.