It seems like you all are landlaords and seeing things from their perspective. :)
Jon
You said "Because the security deposit is to ensure you leave the property in good condition. If I let you use that money for the last month's rent, and you do leave any damage, even if minor, I have no way to recover the expenses to fix it. Some amount of damage is inevitable, even if you work hard to restore the place to the same condition as you found it when you moved in. "
For this the reason I offered my landlord, rent for the last month but asked if he could do a walk through on the day I am leaving. If all looks ok to him then he can give me my deposit back. I would also present my paid bills paid until the end of the month so he is not stuck with anything after I leave.
Now what is wrong with that? How is he getting hurt? He still refuses. This is after I paid him rent on time each month and took care of his property like it was my own.