I'm interpreting this to mean that my April 1 increase is completely void and that, rather than dropping the increase to 3.5%, I have to start again with the notice process.

The Regs provided some safety net, confirming that our interpretation was legit.

The only problem is -- based on the police and their interpretation -- is that they will say it's a civil matter and refuse to get into it.

I'm concerned that other professions might interpret me to be more of a dim-witted meathead rather than a professional like themselves.

If I try to interpret what you are suggesting, I think what you are saying is that a $100k house should be able to generate a $1000 in rental income a month and after deductions you should be in a good spot.  

Sounds like the irs is lenient on the stipulations of withdrawals per their website and from what I interpreted.

HUD's interpretation of the federal laws surrounding this matter are readily available, and all landlords and PMs should be familiar with it (there has also been a flurry of lawsuits related to it, exposing many landlords and PMs to significant liability). 

From my interpretation, this means that the county took possession of the property at this time and this is a matter of confirming the auction date with the assessor?

I'm not sure if there's a more creative and beneficial way to interpret it for tax purposes.

I interpret your tips as 'play it safe', which is something I definitely need to keep in mind.