I have done several of these over the past couple of years - feel free to reach out if I can help walk you through it!

Additional costs and magnified frustration with lenders’ requirements compete with the near-impossibility of having the required buyers’ walk-through of an empty house three days prior to their closing on it.I can only assume the new 3-day rule was set by somebody who has not participated in many residential closings.

Otherwise I'd walk. 

Often when heirs find out that there are strings attached ( money owed) on a property given to them, they walk away if they don't have money to cure it, or if  more is owed than what it might be worth.

Requiring "contractor review" essentially saying I need 3 days with power to walk through with a contractor.If you are talking about for the lender etc, that will be up to them.Looking at your legalize (and I am no lawyer by any means and not offering any advice) but I read it as to say he can't tell you he is a certified home inspector and you couldn't go around selling his services as one.

I am now about to have to walk away from my third deal.

Assuming we walk away with 100K at a 50% split should i take that 50K and use it for a downpayment on the next flip or look to buy rental property to hold?

I can get into a cross walk in front of a speeding car about to run a stop sign, legally I'm right, but that doesn't make it a good idea.

Parents plan: My plans plus complete kitchen gut, new trim, new doors, remove fireplace to accommodate a new half bath and walk-in pantry(that one isnt as straight forward as it sounds because a beam had to be added to support the load and the entire house had to be re plumbed to add the bathroom!).

It sounds like you're on the right track.Your lender should be able to walk you through the options the payment differences, and the other ramifications such as tax deductibility of each.