Hawk, I generally tend to agree with what you're saying. I honestly don't have a huge problem with the fact of the permit itself, at least from the viewpoint of stupid homeowner tricks, it just nearly gave me a heart attack when I started adding it all up. And yeah, those scary things that you've seen are exactly why I want to rewire this place. Things like the blind junction behind the sheetrock in the family room that was just wire nuts and electrical tape. On a 220v line. W/ no ground (yes, I know that technically the neutral is bonded to ground - there just wasn't a separate ground wire). Yup, apparently there are some instances where you can run 12-3 with no ground for 220. Or at least that's what they did anyways. The way it was done, I'm guessing that it was originally for one of those cadet forced air heaters, and then they decided to do a baseboard heater instead, so they did a blind junction behind the wall and then just sheetrocked over it. Well, they never did install the heater, so there was just a loop of romex sticking out of the baseboard with electrical tape covering the tip off (where it had been shoved back into the wall). Imagine my shock when my father in law put his non-contact voltmeter up to it and it started beeping....
However, when we built our bay window out, we also did it the legal route and took out a permit. The inspections were an absolute joke. For the structural inspection, the inspector came out here, glanced at it for *maybe* 2 seconds, and handed me the "passed" slip. The insulation/wallboard was even worse, if you can believe it. Our final was probably the most ridiculous, the guy didn't even get out of his truck.
When my parents rewired their house (different county), their electrical inspection was pretty much the same thing. Inspector came in, picked 1 plug, put one of those "3 light" wiring testers into it, flipped a couple light switches, and called it good. Didn't even take the cover off the panel to inspect any of the wiring in there.
So while I respect the reasoning behind it, and appreciate that your'e one of the good guys, my two experiences with the permitting process have left a less than reassuring feeling about the "inspections".