ATC clears takeoff aircraft for midair

I'm a newly minted PP-ASEL and had a disturbing experience the other day.
I've begun renting at the field where I trained, a busy class D airport.
It's usually not possible to do pattern work there because it's so busy.
Returning from a local flight, I noticed that there was very little traffic,
so I asked to do some touch & gos; I was making left traffic using runway
16. On the 3rd or 4th go, I noticed that a craft was cleared for takeoff on
runway 11. I knew immediately that our paths would cross. I could not see
the other plane as it was behind me; the other pilot was warned by the tower
that I was in the pattern making left traffic. The other pilot finally saw
me as I was turning crosswing to downwind (heading 70 to 340) and he
indicated he was turning right from his takeoff heading 110. When I caught
sight of him, I don't think we were more than 100'-200' apart. At this
point, I said "traffic in sight" and tower replied "maintain visual
separation." If I had it to do again, I would have left the pattern and
headed outbound heading somewhere between 160 (my departure heading) and 110
(the other pilot's) until we had positive visual identification.

I'd be especially interested in comments from Gene Whitt, who said ATC has
been trying to kill him for 40 years, and anyone who might recognize the
airport from the runways described.