Need help after a not so great inspection

A 'lift kit' or more accurately, a 'flip kit' will accomplish your goals. The spring-over axle conversion I posted a picture of earlier is essentially what the end result would look like. However, be advised that flipping the axles will raise the overall height of the trailer by the diameter of the axle plus the thickness of the springs and perch. In your case, that looks to be about 5 or 6 inches.

I still can't see how it's illegal though... This is an exceptionally common setup for a travel trailer, car hauler, or utility trailer. I'd want to see the specific statute being violated, not just take somebody's word for it.