Thanks for an accurate response. Fixing an exhaust leak that far forward should be a no-brainer. Even without the risk of CO poisoning, no quality mechanic is going to pass something that noticeable, just begging for the DMV to pay you a visit.

OP, it's a very imbalanced system, as most of the inspection manual is open to interpretation. Not all shops log failures with the tablet, you could ask another shop to look it over and ask them if it was registered a failure in the system. I don't believe there's any problem with Bondo on fenders if they're not structural. That is more for rocker panels on a unibody car, which ARE structural and spray foam/Bondo won't do well in a crash. Exhaust, just gotta fix that one.