All moral stand points aside, and the fact that these sellers have recently lost a loved one, what's inheritently different when it comes to closing one of these deals?

Moral of the story is I probably should have stuck with my gut and just evicted her.

And it looks like you just lost $1,000 a month for the length of that lease.The moral of the story: Always send our uneditable formats to tenants.

It helped me reconnect with people I had forgotten about who really cared about me and boosted my morale tremendously.

Not only do you have admin headaches, but you have double taxation on the net profits (taxed at the corporate level, and again when you take a dividend).So, moral of the story, STOP NOW and connect with a pro.

Is this a more legal or moral issue I'm dealing with?

Moral of the story, I am stealing @Elizabeth Colegrove's advice and putting a deductible in my next lease. 

Moral of story:  Don't be a jerk.

I've hired a lot of employees and it's the same phenomenon - the best employees are going to have ethics, morals, self-motivation, intellectual curiousity, etc - and those same qualities eventually lead them to seek out greater challenges. 

Smart move; you could have found yourself in a predicament somewhat like this next thread:https://www.biggerpockets.com/forums/41/topics/339549-salvaging-bad-flip-defaulted-loan-taxes-overdue