There are still a few company towns in existence - so the idea of a person or company being able to build a community which becomes an incorporated municipality is certainly possible from a legal standpoint (albeit exceedingly rare in recent decades). Of course now that the dictator is in power, laws are passed or otherwise enforced which trample on the rights of citizens. Well, we have precedence for that too.
Looking at one of these company towns, Chickasaw, Alabama, which stopped a man from distributing religious material. The basic argument was that as a private city it had no public ground (i.e. not a "public" sidewalk) and therefore the person in question was trespassing. When the case was heard by the Supreme Court they made two important (to your question) decisions:
1. Ownership of an area does not equal absolute domain (i.e. 207
the more you open a property up to the public in general, the more your rights as an owner are going to be overtaken by the rights of those invited in)
2. That the rights of citizens under the Bill of Rights occupy a preferred position over the rights of property ownership
As this was a SOCTUS case, and has not been overturned by any new precedence (so far as I am aware) so any dictator in your story would have to deal with the legal repercussion of this. However, to build a case you would need a complaining witness/victim and it can be very hard to find people willing to speak up in situations like this (esp. when trying to corroborate a report).
Now, the above is if you have a "dictator" who legally claims his own township. If this is a violent coupe, rebellion, or even non-violent secession - we also have history on that. One of these was a bloody civil war, a more recent example has been stated to have no legal standing due to a different SCOTUS case.
And the decision in that case has our answer on what would happen:
* Point 11: verifies the full authority to suppress rebellion and secession.
* Point 13: confirms the right of the Union (the Federal Gov. of the US) to establish temporary governance of the region.
So either law enforcement or military would step in to re-establish the area as part of the Union. 207