I have an outdoor pool that easily have 1k+ people using it every season and I never had single complaint due to the water quality.

It appears to be a means to an end and the path of least resistance (somewhat related to number 1).

If not, then the path of least resistance is to simply adjust your vision so it fits better into the lot, as-is. :) A zoning change can take up to 6 months, approval isn't guaranteed (despite Aldermanic support), and potentially cost a lot of money (architectural site / floor plans & dimensioned elevations, zoning attorney, holding costs, etc.) 

My parents have finished paying off the mortgage on their home and are wondering weather it would be more profitable to sell their home or rent it out. 

I plan on converting the barn into another sleeping space and indoor/outdoor rec room.

I can see how an application fee per person can be a deterrent for applicants in my case whether for more upscale rentals people may see it as more normal.I am starting off as a non-refundable fee and measure the resistance, then adjust if needed.

Resist the urge to oversell yourself and your experience.

Real estate is a people business and only after you master the people can you weather your business with finess.

I would consider keeping it if you can weather the -$700 a month. 

Whether or not you believe there will be drastic changes, we are already seeing increasing weather events with unusual patterns like the hurricane that whipped through Central (Inland) Florida in 2024.