So pretty much turning my inverter/converter loop into an inefficient heater. Any good solutions for this? It's kind of like I want the power converter to be wired on the "shore power" side of the system, and have that side isolated from the rest of the 120V system by an isolator, so the converter only kicks in when real shore power is being used?
You could use an isolator relay but a switch is easier to install. Some folks use a circuit breaker if there is a dedicated breaker for the converter. Same for the water heater.
Since power draw from the AC side is not huge for a converter, a 15 amp (or so) rated toggle or panel mount switch can be installed on the face plate of the distribution panel/converter. Remove the power supply wire from the convertor, connect to switch, and install another short wire to the converter. Loop removed. If you get a lighted panel mount switch, just a glance will tell you if the convertor is powered or not.