Your witness overstepped his/her authority. He does not have the power to make such requirements. He can recommend but not require, he should have stepped aside and steered you to another witness. Who says your first electronic deployment has to be on a 50-pound rocket flying on an L motor.
Absolutely correct. Electronic deployment is only a requirement for level 3 for that reason that no level 3 motors can use motor-actuated recovery. It's perfectly acceptable to fly motor-actuated recovery for level 2 per the official rules. Agree with above as well that you should find someone else to witness your flight.
I remember when I got my level 2 back in 2006, electronic recovery was still considered fairly advanced, and my witness was shocked that I was using electronic recovery. He seemed to feel better when I told him I had previously flown the rocket with electronic recovery on an I motor.