There may be a cheap and easy solution. Your plumber was correct for code reasons to ask for the same pipe size. UPC does not allow for a reduction in pipe size due to potential flow velocity issues. The internal manifold is only 1-1/2" on that system, but since the pipe is inside of the tank, the potential for pipe vibration, excessive noise, etc, is not an issue. Water velocity can exceed 8 FPS inside of the system with no problem. All that being said, I need a picture of your system to determine the correct way to modify the system for better meter accuracy. There are dozens of meters companies use on the 2900, some are repairable in the field for better low flow accuracy. As to the drain noise, that system should have a 4 to 5 GPM DLFC button depending on water temperature. Can you confirm or check the water flow to the drain? Also, be sure to run the drain pipe in 3/4" PVC, this will reduce the velocity, and usually the sound. Lets see a picture of the unit, with details on the meter so we can help you out.