It sounds like you're operating outside of reality and common sense, and have entered the twilight zone of local ordinance and inspectors. It really doesn't matter what federal code or law is, all that matters is what the local zoning board requires. If they pass your inspections and give you a Certificate of Occupancy, then that's all that matters. Of course, that also means that you have to do it their way. While fighting them is doable, I've found that doing this beforehand and asking for permission is always the hardest way to go. Doing it wrong without their permission and then asking forgiveness or seeking out a variance is actually the easier way to go in my experience. Once it's done, it's just a matter of convincing them to live with it, compared to getting them to change their mind before hand, which is always impossible.
Good luck,
Eddie