The building regs apply to new builds, extensions, major refurbishments, and changes of building use to dwellings. Part M will certainly apply in this case. Get the customer to have a word with the building inspector involved and ask for his preference to be considered. If the BCO is a reasonable guy he'll let it by, if he's one of the jobsworth types, no chance.
I've always understood the Part M only applied to new builds - happy to be corrected if I'm out of date, but consistency in a home is better IMHO, so extensions can be at the "old" height
I thought mains smokes were only required on two story extensions?