Unless there's something more in the manufacturer's instructions, all the IMC requires is 10' from the lot line, IMC 804.3. Exhaust system terminations don't apply because while everyone calls it exhaust, its actually an appliance vent covered in chapter 8 of the IMC (not the IFGC since its not natural gas/propane).
As far as your question why it only has to be 10' away instead of 30 like for flammable fumes, my thoughts are because of the potential for explosion of flammable vapors that you don't have with this because its already been burned so its no longer flammable. The fumes coming out of the generator vent are products of combustion and should generally dissipate for the most part within the 10'. Of course if the wind is blowing the wrong way it may not be the case.
Like Yankee said a few posts back, if the vent termination is 10' from the lot line, there is legally nothing the inspector can do. The codes are minimum standards that the inspector enforces, and he/she can't just decide they don't like something and require it to be changed. Same as when a posted speed limit is 45 you can't get a ticket when doing 45 because one policeman think it should be 30.
Other than in a power outage generators don't run except for short maintenance checks, so hopefully one the construction is done the mess will disappear and the majority of the issues will settle down.
