Little nuances, like specific caveats in the zoning, will make a property that seems clear cut in compliance get disapproved during the zoning review.

So in our case the seller would have just called their attorney and issued a disapproval of contract.

The chief reason is such disapprovals, i.e. converting garages to bedrooms, converting basements to apartments is that it will lead to increases in population, more than what the area is planned for.

During the review and inspection period he is protected or can do disapprove of the contract and make it null and void also right?

Since this is all active income, the chances of the IRS disapproving are much less than if I were buying and holding.  

My thought was if the neighbors disapprove and file a complaint, and I was forced to leave, I could move back in with mom and legally rent the home.

You must provide conditional approval or disapproval based on credit and income first. 

Is it correct to say that there is basically no affirmative "approval" received when doing a 1031; there is really only a disapproval of one in the form of a failed audit.  

Most people, according to Fox News believe that she most fit to be a home maker... http://www.foxnews.com/politics/2009/07/27/fox-news-poll-percent-disapprove-congress/

Disapprove of financial performance and rent rolls?