It is a grounding electrode even if you do not want it to be. If you have 10 feet or more of water pipe in the ground the NEC says that is a grounding electrode and you must use it. It does not give you an option to not use it.
Yes it will serve as a grounding electrode but it does not meet the requirements needed.You would have to tear a lot of the structure apart to get to where it comes through the wall to ground it behind the first fitting.
The inspector I think didn't want to tell the owner he was going to have to spend several hundreds or maybe a few thousand dollar to tear part of the Building and rebuild it when he could go another way.
We drove a ground rod.