My son learned very early that manners and conversing politely with adults got him all sorts of "extras". Usually it was just kudos for his manners, but because he was polite, adults would answer his questions and actually have a "conversation" with him. (Positive reinforcement to the max!) I think the "do as I do" method is the best way to go with some nudges here and there, of course. If you say please, thank you, you're welcome, etc., your child will to. And the tone of voice is as important as the words. "Wow, that sure didn't sound like a "please, may I ....." was all we had to say - politely, of course!
As far as rude kids in our house? We never tolerated it. Granted, our house was "THE" house to go to (we had a creek, pigs, chickens, cats, dogs, and a great rope swing) so we had that in our favor. If we were ignored, or had the eye roll aimed at us, we would say, Wow, if "L" ignores us (or rolls his eyes or ....), he's sent to his room. We don't do that in this house. If "L" wanted them to come back, HE would explain to them that if they were rude, or misbehaved or didn't listen, they couldn't come back to his house.