Every wall had to be repainted (not sure how they got so dirty, stained and scratched).

I hoped all the stains would com out but wasn't holding my breath.

I use Medici grey from Walmart for the walls and Nova White from Walmart (Glidden Complete 2 in 1 primer stain blocking) on the trim.

Unlikely, they all graduated and have stellar careers.Not everything is black and white and if everything works with the tenant but a small stain in their history, don't completely block them out because of it.My two cents,-Sean

In contrast, large rips or indelible stains justify a deduction from the tenant's security deposit for repairing the carpet or drapes, or replacing them if that is reasonably necessary.One common method of calculating the deduction for replacement prorates the total cost of replacement so that the tenant pays only for the remaining useful life of the item that the tenant has damaged or destroyed.

There were a few small stains on the carpet in one of the girls rooms and the living room last visit, but that's it.

Are you also going to be changing out this carpet, it has a stain over here...."

That would shake me certainly.Draft that nice letter, honor your suggested option of first option if you want to sell, (integrity matters whether in writing or not), and if you decide to move back in to your home prepare yourself for a few dinged walls and stained floors!  

They will shampoo as required by the lease before leaving for Texas (they even said so), but judging by the type and amount of stains on what was spotless carpet before, I feel it's more likely it will need to be replaced. 

Stained or just poly-ed cabinets hide imperfections much longer.Painting cabinets is not expensive but it adds up and adds time to turns if you scale to more properties.