<font color="blue"> most folks will see that same circuit and say to themselves that if it is OK to use a welder in an overcurrent condition then why can't we plug in our other 220-volt high current tools on the same circuit and get by. Hey the welder worked didn’t it? "a potential exists" </font>
PineRidge, you have hit a huge issue that those charged with enforcing our building laws face everyday. We cannot AND must not attempt to enforce codes on the "what-if" philosophy.
Building codes (laws after they are legally adopted) are the minimum standard. Is it permissable to use a #10 wire on a 50 amp circuit for a electric welder, certainly, Section 630 of the 2002 NEC says so. Could you use a #6? Of course. Nothing restricts us from exceeding the code as it is a minimum.
There are a multitude of issues in all of our model codes that tend to confuse the casual user; why do we require a guardrail when the fall height is more than 30 inches? Can not one be hurt just as badly in a fall from 30 inches? Or why is it that the code has established a certain stair geometry for 20 years that, at last count, 38 states promptly amend? Why do some areas require carbon monoxide detectors when others do not?
Rambling again, man I gotta learn to stop that! Building laws are a minimum, as a building official, I would defend Inspector 507 in his citing and application of this code section. There is not a 'just' court in this country that would do otherwise. On the other hand, an inspector who makes up his own rules or writes a correction order based on the possibility that a "potential exists" would get his walking papers. Right or wrong in your mind, we cannot legislate against stupidity or careless actions, we must leave that to Darwin.