Although I haven't had a lot of experience in this matter...but ...would the fact that the OP stated this was a whole house set up, be the reason for requiring it to accomodate everything?
That was the original plan until he found it would not carry all of the loads calculated under 220.
Then he said he could drop some load from the generator. The generator only has to carry the load transferred to it. With an ATS, any load transferred must be calculated according to 220 but it does not say that you have to transfer every possible load, as long as this is done automatically. With a manual transfer, you can manually cut loads on & off.
Why does the inspector get to pick what load is automatically transferred? The inspector was correct about the 220 calculation using the fixture rating. He was incorrect to specify which loads have to be transferred.