If you decided to test and remediate, you are going to kill 99 percent of the deals out there with older houses.

Does anyone have experience with this and found an actual remedy?  

The acceptable remedy is to change out those outlets to Co/alr outlets which saves the borrower a lot of money.

I had to remediate the absestos adhesive under the resilient flooring in the kitchen and large pantry before I ripped all the luan plywood up and the 3/4 oak flooring underneath it with plywood over the diagonal planks, then cement board, then tile.

We ran into a couple issues with quality of work on the paint job, but it was remedied fairly easily.

Lead paint remediation isn't cheap.

Why isn't insurance handling the cost of the attorney and remediation? 

By buying the property, you would be accepting the building violations that come with the property and they would become your responsibility to remedy.

If it's the latter, I guess the remedy to prevent this from ever happening again would be to change the locks immediately after the old tenant moves out.

Most likely they will schedule an approved appraiser to inspect which would allow them to determine the severity of the damage and remedies needed to resolve.