can i use a sheet of 26ga aluminium instead of a 1/16" steel plate?
The Code specifically indicates clearance from the edge of a framing member. It makes no mention of clearance between studs.

From the NEC:


  300.4 (A)(1) Bored Holes. In both exposed and concealed locations, where a cable or raceway-type wiring method is installed through bored holes in joists, rafters, or wood members, holes shall be bored so that the edge of the hole is not less than 32 mm (11⁄4 in.) from the nearest edge of the wood member. Where this distance cannot be maintained, the cable or raceway shall be protected from penetration by screws or nails by a steel plate(s) or bushing(s), at least 1.6 mm (1⁄16 in.) thick, and of appropriate length and width installed to cover the area of the wiring.


Ask the inspector to cite the specific section of the Code that he is using to require you to do this.

If they are going to require it they need to cite it. 

Good luck!