How do you go about dealing with an editor that pretends to be ALL the reviewers and reject a paper based on his/her 'made-up' reviews? Should I complain to the editor-in-chief or simply let it slide? The editor is a big name in my field.
I am highly suspicious that a big name in a field would make up a bunch of one line reviews for a submission. You should have definite proof and should think long and hard about how irrefutable your proof is before proceeding further. Bringing this up will reflect extremely poorly upon you and your co-authors if you turn out to be wrong.
That being said, if you believe that you have proof of foul play, you should raise the issue with the editor-in-chief or whoever is higher up the totem pole. If you turn out to be correct, someone should inform the editor's school or place of employment about the academic misconduct.
If you'd like to take a more cautious path, you can email the editor-in-chief and ask if there was a reason all of your reviews were so short and if they had any suggestions for avoiding this in the future. You'll side-step the direct accusation while bringing the reviews to their attention.
While nothing is impossible, it is extremely, extremely unlikely that the editor risked his or her career -- because that's what faking peer review would be -- in order to sink your paper. Even if the editor cared that much, he or she could simply desk-reject the paper. This does not require, as you seem to think, that the paper be outside of the journal's scope. I desk reject more than a dozen papers annually, most of them for quality reasons, not scope reasons.
If the journal has some strange system where desk rejection is not allowed (as does e.g. Frontiers) it is still likely that your paper was seen by two referees. If the repeated text is unusual, it could be that the editor sent a leading request to the referees, along the lines of "I think this paper misuses methodology x in order to do y -- what do you think?" Then if both reviews say "This paper misuses methodology x to do y", this is not because the editor cheated and wrote the reviews him or herself, it is because he or she lead the referees with the review solicitation.
Extraordinary claims require extraordinary evidence. Unless you have extremely strong evidence that the editor behaved as you claimed, you need to consider other more parsimonious explanations.