I dont want to sugar coat it.

Interiors, I prefer wire shelves with a white coating on them instead of a wooden shelf.

For my rental, I did all the patching and skim coating myself, and got a nice smooth wall.

Do you do flat on coat 1 and then add gloss for the second coat on walls and trim but not worry about cutting in perfectly?

Probably a light sanding, a coat of stain, and about 3 coats of clear will make them shine!

At this point, this tenant sounds like they're all bark with very little bite - I'd just keep documenting everything in writing (as it sounds like you've been doing) and sending everything to them via email as a backup as well, and only involve the lawyers if the need actually arises (e.g. if they file a rent escrow action; if you need to start eviction process for non-/partial payment; if you get them to agree to a mutual lease termination; etc).If you do end up going with the carpet replacement option, I would also recommend going one step further: in addition to replacing the carpet and the padding underneath, also take that opportunity to put down a coat or two of heavy duty Killz on the subfloor before the new carpet gets installed. 

Replace the blinds, get rid of the carpet, change out the light fixtures, and do a fresh coat of paint.

A painter once refused to use the paint I purchased because it would require more coats than the paint he normally gets. 

I can tell you right now the cost for sheetrock, labor to install, mud and tape and sand to level 5, prime and 2 coats of paint (7 different colors throughout house), touchups were about the same as what you seem to have been charged. 

However, and I feel very strongly abut this, if you are dealing with, for example, a truly lovely craftsman house with loads of wood trim and character features, or a victorian house, or something else which is spacious enough to work as separate rooms and has a load of character, I feel it is a crime to erase all the walls, slap a coat of hideous grey paint on everything, and put in a glitzy-glammy colorless kitchen open to the majority of the first level.