Did he cite a code section?
Nopers. Even though he is the "Senior Building Mechanical Inspector Code Enforcement"; i.e. inspectors supervisor, I did tell him I was going to research it to verify if he was right or wrong. Of note, he's an inspector exception as he's personable and reasonable.
The Mr. Cool product has in it's installation manual showing an "air break switch" at the air handler unit, but has no means to connect one without disassembly of the already prewired air handler. In addition to that, the MC, coolant, and drainage lines all prewrapped in a design to just sleeve through the wall own to the compressor, where only at that end are they separated.
They do make a switch that suppose to comply if only the design would allow for access to the wiring at air handler without total disassembly.
You are right on point. This is the problem. It appears the whole air handler unit needs to be taken apart to interrupt the power and route locally to the required disconnect; i.e. it's not designed to do that even though the manual mentions it might be required. This is a DIY kit designed to be super easy and basically everything snaps together.
Here's a pic of the cabling. Cutting the electrical cable with it's press on connectors and finishing shield just isn't vey DIY.
I haven't heard back from MRCOOL yet with any of their instructions/guidance/suggestions/answers. Considering all the NEC codes mentioned it makes no sense to me that they would make this kit out of compliance with standard code and be able to sell it. (I've read in other threads that some states have made stated exceptions to spit systems, but it wouldn't make business sense for MRCOOL to target for sale these units to only 2-3 US states!) The California ADU market is booming. I talked to the owner of a HERS inspection company and he said they majority of their business for the last couple years is ADUs at almost 100/mo. Typically that's a lot of garage to ADU conversions where ducted forced air to a 500 or 600 sq ft space doesn't make much sense financially and mini splits are a great affordable solution. MRCOOL must be getting hit with this problem constantly and realistically should have a solution; though that solution is probably buy the pro kit and have a pro install it.
I will update here as things progress. I'm hoping for a response from MRCOOL along the lines that the kit isn't designed for a local disconnect and that opening the air handler will void warranty blah blah, then I'll go bounce all this off the inspector and point out that the outside disconnect is LOTO can be locked out in off position. Hopefully he'll than agree to pass the inspection as is. FINGERS CROSSED!