I got more than enough up front as the non-refundable Option fee to cover all expenses and rents and to get a judgment against the Optionee.

Simply put the risk of a non-renewal costs more.

And, the breakup fee is a non-starter.

I know that the general guidance is that emergency funds aren't to be invested, but given our financial security and the fact that we already have a personal e-fund in a safe, non-volatile location, would it still be crazy/unwise to invest this 15k in an S&P500 index fund in a brokerage? 

A special committee was formed last year, and was to hold 6 non-public meetings and then send their finalized recommendations to the commissioners in November.

That way they keep their licenses and ratings.I don't see much of a difference really.Don't keep them out as they will get increasingly suspicious and they might pull your permit for non-compliance.

Most nearby cities are the same.Even in the Denver-adjacent cities that do allow non-owner occupied STRs, they vary widely -- some have caps on STRs, some cap the nights rentable as an STR, some cap the number of vacation rentals one owner can have, etc. etc.This is all to say, first know where you can do Airbnb, then start running numbers.

If you are open to non-traditional methods of financing, you could use a debt service loan to bypass that requirement.

Out of curiosity would anyone be willing to share any experience with non-paying renters who've vacated the property prematurely?

I know property managers in every state who use non-refundable application fees and it is the standard for every class of property and applicant.