On Saturday I drove to a different Test station that is familiar with classic and American cars. Funny enough, although the brakes were not great by any standards, using the correct procedure, they passed!! I now have my Inspection sticker and two years before beginning this fiasco again.
Lessons learned:
1. Don’t waste time trying to convince a German official when they are in the wrong.
2. Always take your car to the experts
3. Always come to the Fiero Forum, as the help is second to none.
4. Since I now know everything there is to know about Fiero brakes, I will never have this problem again!

Once again to all that offered advice, it was much appreciated and received with gratitude. Now, I am going back out to have a blast!!!