In the area I live in, there is a requirement for permits and inspections in unincorporated areas to be handled by the county. The inspector is legally reuired to enforce the entire building code. If he comes out to inspect your electrical service & sees a plumbing code violation, the property owner will be required to correct the plumbing code problem.
As far as legal means to fight this, get a specific code article citation from the inspector. Hire someone that can determine if the installation met the code at the time of installation. If the installation met the code at the time it was installed, it should be grandfathered, if it didn't meet code for that time, you're probably going to be out of luck.
Why would a fuse box be required to be replaced with a circuit breaker box? This is entirely bogus since there has never been a documented case of a properly sized fuse failing to work. The same cannot be sid about a circuit breaker. Make sure that your local government has actually adopted, by enactment of a law, the removal of fuseboxes.
Just because you need to add outlets doesn't mean you need to add service capacity, after all, receptacles consume no power and there is no limit in a residential setting as to how many can be installed on a circuit.
Tom
