A 200 amp meter base can handle up to a 200 amp main panel, your 125 amp panel wont even make it break a sweat.
As for the main disconnect, it is nice, but not mandatory; I don't have a main on my barn service, and Duke Energy didn't have a problem with it.
If your inspector, and utility are good with what you have, I'd go with it.
I wouldn't be worried about the meter base, I would be worried about pulling more than 100 A through the 1/0 service entry wire. At the end of the day, I would confirm any potential fixes for the problem with the inspector before doing anything. I would guess that if you fed the panel through a back fed 100 amp breaker instead of the main lugs, that would probably satisfy him but then again who knows.
I suppose it largely depends on what load the service is supposed to support as well as how many breakers are going to be in the box. If less that 100 A load and less than six breaker throws in the box, it might be OK as is.
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