Re: Hot roof vs. cold roof: problems with city inspectors
It wouldn't surprise me if the municipality has made that a requirement not for tax assessment but to avoid improper insulation installation which could lead to mold, etc. However, from what you've described I don't feel that would be a problem since you are making it interior space, effectively.
What I really, really, don't get is why they would want you to furr out the rafters, since burying them in insulation prevents thermal bridging. Is it possible that this attic space could be finished into storage/usable space? Are they worried someone would put up drywall directly over the insulation in future? I don't see snow load as a problem since they are existing and it was a cold attic as it was. How big of a volume is the space? I assume it has an access panel, typically attic space less than 24" in clear height does not require access (new construction, of course).
I wouldn't, personally, bother with a variance since it could affect selling your house in the future, if your municipality requires inspections, etc.