Sure, go ahead and tell him. Just say you wanted to give him the chance to get the sale, but it's not worth $100 extra, to do business with him. Be honest, if it offends him, he's a poor businessman. If he simply can't do it, at least you gave him the chance.
I agree...especially if you have a good relationship with him. A $100 difference does sound a bit steep and I would not be surprised to find that he may have misquoted you the price. Most small shops still need to make a profit so their prices may be a bit higher. However, in some cases the prices could very well be the same as Cabelas or even a tad cheaper.