Well, the way it would go with me is that I'd tell the person to shut up. To h*ll with being nice. I guess the most unharmful thing would be to remove myself from the situation.
It was fun. When a blow hard is tooting their horn about how great they are eventfully I will say - ya but your hairs not made of gold. It bugs them because they know it's true and it's pretty funny watching them try to think of a come back. Cheers!