Yankee:
Here's the problem as I see it, whenever I've had a special inspection signed off I've proceeded as if the inspector had signed it off, in this case Sim had his Special Inspection report and the SE's personal sign off on the steel, he proceeded to bolt his nailers and continue his framing. After the building is framed the municipal inspector comes on site and condemns the special inspection, now parts of what had been framed up have to be torn down so the work already inspected can be fixed and re-inspected, prior to replacing the framing.
If Special Inspections are going to be second guessed maybe we ought to do away with that whole section of the code and have the municipal inspector inspect everything, even if it means he's got to stand around and watch things like iron work, pier drilling, epoxy bolting, and CMU lift pouring, to mention a few.
To me the bigger infraction here is allowing the Special Inspector to be employed by the contractor, in this situation this SE firm had inspected several of the framing contractor's recent prior homes, if the SE firm knows that the contractor is referring future work to him he may well allow some corners to be cut.