Worst case, I have to get them evicted, fix everything they broke, get the house repainted, re-carpeted, etc.The only way I would consider it is if they were will to give me a non-refundable deposit that would cover all the basic cosmetic repairs (painting, flooring, cabinets, etc).

Austin, I am a little confused by what you are asking, but there are many ways to improve value besides kitchen and bath:- landscaping- new windows- flooring throughout- trim/molding throughout- new roof if needed- improved light fixtures throughout- add/remove walls to make better use of space if needed- add built in bookshelves- repaint the outside/shutters- increase energy efficiencyThose are just a few things and what to do will of course depend on the comps in that area and what is selling.

Can I hold back from their security deposit the cost to re-paint all the scuff marks on the walls and water damage to the pergo wood flooring that they will leave behind or, is this considered normal "wear and tear"?

The 10 month was a little more expensive.The pro to having that 2 month window is the landlords use that time to repaint and repair the units for the coming school year.

I too just wait till I get possession of the unit because there is always repair, repaint, repositioning of the unit to get a higher rental fee.

HVAC and water heater repairs pop up, and are into each unit for $2-3k during turns to replace carpet, repaint, new appliances, etc. as the previous owner did absolutely no interior updates or care unless he absolutely had to. 

And the smoker will probably smoke inside, so plan on repainting.

I have :) I did that in the beginning and i've since had to repaint 100% of the flat painted areas because... tenants are dirty :) (but my tenants in those units have been EXCEPTIONALLY dirty.

We were changing all flooring to accommodate use of a wheel chair and decided to repaint and update other things as well.  

If the pressed board at that age they will start crapping out and will need replacing versus real wood you can sand down and repaint.4.