I have this problem in one band I work with. Six-piece band, with a great lead-player (who doesn't over-play and gets great country tone out of his Tele), and a rhythm-cum-lead player who plays too loud and uses a distortion pedal constantly. He's what we call a "pub-rock" guitarist, and that's pretty much his background.
Part of the problem with this player is we suspect he has partial hearing-loss. I recently had my hearing tested. (I have spent decades around aircraft engines and loud firearms) and I know I have equal response in both ears from 200Hz to 5Khz, but I have a slight dip in response in my left ear at about 1Khz. If you are a player you need to know this! Try suggesting to a guitar-player he should have his hearing tested...it's a red rag to a bull!
Another problem with this player is he competes with the lead-guitarist. Now the lead-player can play circles around him, but he still has to compete. Why? What's the point?
As others have pointed out, a lot of guitarists think they have to play all the time. The whole band sounds way too "busy". On steel, I have the great luxury of not needing to be there much at all. All I have to do is play the least amount possible, as tastefully as I can.
In fact, I lay out for a lot of stuff the band does. No member has ever complained about this, but others are muttering about the too-loud guitar-player. Given enough time, he will get the message and modify his technique - or leave. We really don't mind which. (Anybody ever hear of a global shortage of rhythm guitar-players??)
The steel guitar is a hard mistress. She will obsess you, bemuse and bewitch you. She will dash your hopes on what seems to be whim, only to tease you into renewing the relationship once more so she can do it to you all over again...and yet, if you somehow manage to touch her in that certain magic way, she will yield up a sound which has so much soul, raw emotion and heartfelt depth to it that she will pierce you to the very core of your being.