Mark,
I would and have required that a garage conversion to living space meet the energy requirements. Here is my justification:
Look at the "Title, Scope and Purpose" in the Administration chapter of whichever code version you are using.(SectionR101 in the 2006 IRC) R101.2 states "The provisions of the...(code) shall apply to the construction, alteration, movement, enlargement,..." Since the scope of the proposed work is the alteration of the building you have established that the Code applies. Now go to R101.3 Purpose. "The purpose of this code is to provide minimum requirements to safeguard the public safety, health and general welfare through affordibility, structural strength, means of egress facilities, stability, sanitation, light and ventilation, energy conservation,..." Now you have the requirement to enforce whatever energy code you are using on this particular alteration. In my mind this puts the burden on the Ahj to enforce the code requirements for everything spelled out in the applicable codes. By the way, in Minnesota we have a code amendment that replaces the entire Administration chapter with our own wording. It is not much different than the 2006 I codes. We are still on the 2006 I Codes.
Joe