Does the FHA rule of living in the residency for a year apply to this loan as well?

That is not a rule but it is fairly standard, (though there are ways around it).Assuming 6 months from the time of a cash purchase to refi is a safe assumption. as for your 70k, aren't you considering doing a BRRRR?

So who would know the local rules in PA?

General rule of thumb is "toddler and idiot proof," and a toddler or idiot could easily electrocute themselves or fall off where there aren't handrails, so that needs to be fixed. 

Road widening, intersection improvements, etc.

So you have to be cognizant of this and make sure you are able to implement RUBS or separately meter after you buy to improve your NOI.

As well as pull some extra for improvements to the property, depending on the equity (which I know is there otherwise I wouldn’t be looking at this property)Am I missing anything?

What matters is getting a below market deal, maybe an under-managed property which you can improve upon and raise the rents.

Is there a hope that it might improve in spring or will it burst?

I have a tenant that I rent a basement room to, my credit score has improved at least 100 points in the last year and I have paid off almost all of my bad debt.