There is no way to pipe the drain pan to a suitable waste drain, so it must be run to the outside of the building. The issue is that my water heater is not greater than 6 inches above the adjacent outdoor ground. It is also installed in a small water closet which doesn’t allow for raising the water heater height. My area adheres to all 2021 International Codes. What can I do? Would an inspector accept the pipe termination be at least 2x times the diameter as acceptable alternative since that is the T&P discharge requirement?
Sounds like poor planning. When you arrange a place to put the water heater, you should arrange that place so code will be met there. Setting things up so code can't be met and then hoping for an exception is not very likely to work.
Take a shovel and change the grade outside, or get a shorter water heater that can be set higher, or tear out the ceiling of the closet to raise it, or find/make a place to dump the overflow inside.