Talked to local gun store regarding ordering a lower and registering as a pistol frame. Was assured that this would be ok & that they have done this before.

Ordered at stripped lower from manufacture and used them as my FFL.

Shipment comes in and I get a call to come in.

Shop insist that I use my rifle permit and that I can only register it as a rifle receiver.

So I feel that the shop just took me for my FFL fees and now I’m stuck with something I didn’t want.

What can I do from here?

#1 - Educate yourself.  It's been explicitly stated on these forums that you need to apply for a pistol permit BEFORE accepting delivery of the receiver from your FFL.  Using a rifle permit technically makes the receiver a rifle, which can never be changed in the system AFAIK.  If you obeyed the FFL even though you knew it wasn't what you wanted, then you share in the blame for the mistake.  You should have insisted they provide the info on the receiver (Bill of Sale is usually given), then go to HPD and apply for a pistol Permit to Acquire.

#2 - Explain to the FFL that they should know the laws and procedures at least as well, if not more so, than you -- since you are the customer and they are the paid professional.  If the FFL makes a mistake after understanding you intended to build a pistol, then they screwed up and should fix it. 

IMO, the easiest solution would be for them to "buy" the first receiver back from you (do a transfer from you to the FFL), then reorder the item again, this time transferring it properly as a pistol.  Of course, you need to wait until the receiver arrives so you can get the specifics on it for the Pistol Permit to Acquire application.  Wait two weeks, and go get the receiver.  You should not be asked to pay another cent for the second receiver if it's all their fault.  In fact, if the FFL has any integrity, they should offer you something for your inconvenience -- like waiving their FFL fee.  Again, my opinion.

#3 - If the FFL doesn't make it right, you have the option to sell that receiver and order a new one from a different FFL -- this time making sure both of you agree on the process before it arrives on-island.

#4 - if you think one person's/LGS's FFL fees are "too high" (relative to what/whose?), then you should shop around for another one.  Many threads on here listing FFLs and their cost to do transfers.

what shop?

I know what I’ve been trying to accomplish isn’t something someone does everyday. Some might not like the idea but quite frankly it’s not their gun. As long as I’m within the law to do so, I should be able to right? To each it’s own.

Part of the "Gun Hobby" is knowing the ins and outs of what's legal, what's not, how to follow the local and federal processes for buying guns, etc.

If you don't feel like you're 100% certain of the things you need to do, my advice is "STOP!" before you do something that gets you in real legal trouble.

If you can't wade through the minutia and details of the laws, HPD procedures, and your responsibilities on your own (it almost takes a room full of lawyers to figure some of the laws out), I'd suggest you get the scoop from someone who knows.  Sometimes following the experiences and advice from an online forum isn't the best source of information, especially since things have changed so much the last 3 years.

I get that you want to "push the envelope" of what most people are doing, but, just like flying a jet, you have to first learn what that envelope is and THEN build on that knowledge to go beyond the norm.

It's sort of assumed that if you are building an AR (pistol or rifle), you either have experience or a good mentor.  If you're learning by watching YT videos, posting narrow questions on forums, and hoping someone will hold your hand through the legal parts, you're asking for something very bad to go wrong.

Maybe take this screw-up as a sign.  Build yourself an AR-15 rifle from this receiver.  It still has a bunch of requirements that must be met to be legal, but in the process of learning those things, you'll better understand the pistol transfer, build and registration process.  I don't recall seeing if you've ever built an AR rifle before.   If so, you might be further along in your quest than I thought.

Basically, learn to walk first, then run.  Each project should be seen as an opportunity to learn, and in this state, you need to tackle the easy stuff first.

Just my opinion.  But after doing my own builds, it's better to start with the straight-forward stuff and work your way up to the advanced builds.

Given the fact you took your pistol affidavit to your FFL, I think you need to spend more time on the fundamentals, such as our state laws, procedures and requirements.