Quickly realizing that it is very expensive to live out here, so it challenging to find properties that would pass the rule of thumb tests (50%, 2% rules, etc).

The 1% or 2% rule applies to when you're doing a quick evaluation to see if BUYING a property for an investment makes it worthwhile.

If you have the skills, the best situation is to find a property that needs work, complete some value-add improvements, then you can raise rents.  

Two: I feel as though I should be running the numbers like the 70% rule starting from their listed price...

However to keep order here we have some clear rules that must be followed.

However, I think I could simply rent out the other two rooms for about 600-650 a month to individual renters, so while the property isn't hitting the 1% rule, it does seem to make sense from a house hacking perspective.

I think there is an unsaid rule about accepting like applicants in a 'first come first serve' basis, but this only for applicants which are exactly similar and it really is just a guideline not really a law or rule.

Can you make improvements to your current home?  

What rules govern my behavior as a borrower/business?

There is no rule set in stone that real estate will always enjoy such a favored tax status.In fact since populism is increasing and most Americans don't receive these benefits, they are at risk more so than in the past.