So I have a few questions;- Should I entertain exceptions, a 'pets on approval' policy - based on breed, behavior, etc?

On top of these very crucial items, landlords will receive an Income Insights report which analyzes tenant income based on their credit behavior, that way you can determine if their self-reported income is accurate or if additional proof of income is necessary. 

However, during challenging times, you must look into your target market (tenants) and predict their behavior or feasibility that they will pay you.

The rent striking behavior you're describing is not going to fly in many markets.

Any suggestions on if I can fight an excessive fine and what else I can do to get her to change behavior?

Be factual and concise and don't name call or disparage the tenant,  just describe their actual behavior.+1 on groups like WA LL association and RHA  (rental housing association of WA)

I'll have to keep an eye out for patterns of this kind of behavior. 

I am not advocating for or against this kind of behavior, merely pointing it out.Texas is a little more conservative with property rights of the owner.

I feel your pain, by early March I had a tenant that was becoming an issue due to chronic late payments and other behavior that was concerning.

I'd double check with who set up your website because the display URL is http://box2139.temp.domains/~getcasha/ which is not going to help your ranking.