The **** inspector opened every panel, took pictures and claimed violations - - BS.I had just done a full restoration after a fire and had the service totally redone and updated to 200amp. 

The 203k allows you to add in the dollars needed to repair/restore the property to the same 30 year term loan.

@Chris Mason had already entered the fray, and then wrote about the possibility of a "one-time restoration".

Refinance existing property out of FHA, thus restoring FHA eligibility, buy next prop with FHA.

Are they actually going along with their plan to renovate and restore the area around the train station?

Restoration companies typically know many of these things and could possibly be of help to you.  

The property is a duplex, which from my estimate; only needs new appliances (washer, dryer, stove, refrig), restoration of front exterior wooden steps, and a new fence around the property for more curb appeal.Looking for thoughts/facts on how to increase value?

However, and someone please call me out if I understand this incorrectly, you can't just refi your way to restored VA eligibility.

At Restoration Hardware they were 700 a pop.

The seller mentions they will be taking a loss since they've clearly put a lot of money into rehabbing and restoring it.