I think your inspector was in error not to approve your airworthiness.
I have a Lycoming engine, but because of modifications it does not meet its type spec.
A log book entry stating this was made and the engine data plate remains on the engine.
The engine data plate cannot be removed from the engine per FARs...45 something or other. (45.13 (b) )
http://www.airweb.faa.gov/Regulatory...9?OpenDocument
My inspection was done by a FSDO maintenance supervisor who will be retiring and needs to show currency.
My test period was also 25 hours because my engine, even though it did not meet type spec was a "certified engine".
I would make a call to your local FSDO for clarification.
BTW, a friend of mine did the same as you and his DAR made him fly 40 hrs in flight testing because he overhauled his engine. Go figure.