After a ton of wrangling I have prevailed. It turns out that the VIN on my registration had a typo. A Z was entered instead of a 2 (I highly suspect Kiser Motors for the goof). Made a big difference. Even armed with that knowledge it took a lot of arm twisting and multiple trips to the DMV, inspection station and the head of inspections.
Things I learned:
1) Since I bought the scooter nearly 10 years ago I am grandfathered in so 50cc(49cc)is still a moped for me.
2) If there's an error on the VIN entry get an appointment to have the County vehicle inspector verify the numbers. It'll save a few trips because the DMV will be reluctant to take an inspection station's word for it.(not sure why I pay to have his inspection questioned)
3) Not every inspection station will do moped inspections probably due to the need for a sound meter to weed out noisy mopeds.
4) The mechanic(inspector) at the 76 station next to KTA in Hilo has a major attitude problem.
5) The authors of the new regulations did not care to address my concerns and I kept the emails courteous. It was Gov. Ige that helped steer me in the right direction(thumbs up!)