Generally, since he opened his mouth, if you reject his request, you become his enemy. It's not wise to feud with anyone in company, especially a sr. director. If this guy is important, my suggestion is that before you meet big boss, set-up a private meeting with this sr. director. You can explain to him the idea of sub-team will not work or will be less effective. The meeting should be in a relaxing and friendly atmosphere. You can joke that the project needs his expertise, and invite him to be advisor / consultant, etc. Negotiate with him or work/funding/arrangement, etc. Maybe you can suggest him that it will be better to promote you to "leader" position, etc (j/k). - overall, try to get him involved under your control, and show him that you are willing to share accomplishment/results with him.
Once you have some kind of agreement/understanding with this sr. director, then go to the big boss. Here you have the solution to the problem, and big boss should be impressed.
Since you are the leader to such important project, get as many people invovled as possible. All the achievements belong to everybody, and you should be a team player/good leader as best you can and give credit to everyone. Once the project is well done, I think you should be looking at some kind of promotion or rewards, with the consent from this sr. director. This would be the perfect ending... haha