Thanks all for the thoughtful answers! I had applied to Institution 1 for a myriad of reasons including overall program strength, location, and ties with other institutions/funding sources. I didn't mention the Superstar PI in my statement of purpose because I didn't know about him (in fact, I talked about other professors that I would also be happy to work with that are staying at Institution 1. Maybe this means I'm flaky or not entirely sure of my exact research interests?). After I had gotten in and was looking around for a lab, I contacted people in the field and they pointed me towards Superstar PI, at which point I inquired about working with him. He's well-known and well-respected in this field, but there are certainly others in the department that are also doing strong and interesting work.
I've visited the institution and I loved it. I didn't meet the PI because he wasn't around that day, though I did request a meeting. I met some other faculty that I could see myself working with, but are not quite on the same superstar-level, as far as I can tell, and I just don't want to miss out on an opportunity to work with the "best." If I do my Master's with him, I would likely continue my PhD with him as well since that would just be easier and I'm so tired of moving around every year or two. At the same time, I hear that grad school is about the strength of your cohort as well, and I definitely liked the cultural and intellectual vibe of the students at Institution 1. I know very little about Institution 2, and I rarely hear it mentioned.
I think you're right, DigDeep, that since I applied to the institution as a whole and there are lots of wonderful faculty there, I should stay with the institution. I just fear that I may be passing on a chance to do the work I think I want to do with a superstar.
But yes, either way I go, I think I'll be okay!