Demo all the drywall out, remediate mold, complete reshingle of roof, replace all windows, replace all outside soffit/fascia/dormers, replace all siding, repipe whole house, rewire whole house, redo all mechanicals such as hvac, redo all interior and exterior doors, paint interior and exterior, replace any framing or insulation damaged by mold/water leaks, replace all gutters, minor landscaping, minor outside repair of concrete wall, install all new cabinets, install all new countertops, replace everything in 6 kitchens, replace everything in 6 bathrooms, install handrails,  install significant flooring and minor subfloor repairs, and install all trim in house.Project will cost around 150,000$.What would be fair for this?

I feel that there is more damage to inside of the house that leaked sewage that I don't want to be held responsible for.- He has now given me the ultimatum  of either me and him finding a solution that is  "fair to both of us" or I move out.

It is easy to replace if a piece gets damaged and is much more durable than carpet.Keep things neutral and as you do repairs, look to see if there are items nearing the end of their life that need to be replaced and don't replace them with the cheapest item available. 

You got $1500/mo in mailbox money (very little maintenance - they can't damage your dirt) and a purchase price of $84k.

An umbrella policy is a good alternative so long as the damage doesn't go above the coverage amount, which is usually one million dollars.

Your state may or may not require you to mitigate damages by attempting to re-rent asap.

Next I would call a contractor to fix the cosmetic damage.

A frozen and cracked boiler, heat lines, and domestic water lines could set us back 5-10k depending on the severity of damage.   

It's only about $25,000 and a year to litigate it and you'd have to prove damages.

If the house is in great condition, ready to put on the market, then putting a short-term tenant in it is a lot of risk (of damage) for a little money.