Spent the day getting info from manufacturer.
They didn't have anything in their instructions about derating of the transformer or using it at 100% load continuously so they sent me a letter stating that it was designed to run at 100%.
The engineer I spoke to said if you weren't able run it at 300 VA continuously on a 300 VA transformer they would have labeled it 240 VA Max.
The secondary is protected by a 25 amp overcurrent device in the transformer. The system was designed by the engineer with a load of 24.6 amps on the transformer(8-37 watt lamps).
The customer is going to put the extra transformers in as they have a deadline to meet. This was deceided after I got the engineer to talk to the inspector, and he still wouldn't change his mind.
I still think this was a acceptable installation. I don't think anything I said or did was going to get the inspector to admit he made a mistake or that he was wrong.