You then find an End Buyer to buy that contract from you for an assignment fee.

@Tyler Keit realtor fees are always negotiable...make the buyer pay his agents fee...or build them into the cost if you can...if an agent is the reason your property went in to contract and closes, some sort of compensation would be appreciated, I'm sure...

2-Am I expected to pay a fee for buyer's representation?

For example, if you purchase a $500k legal balance (unpaid principal + accrued interest/fees) for $200k, then rehab and sell the property for $300k, can you write off the uncollected $200k (the $500k - $300k difference i.e. not pay taxes on your profits, as on paper as the lender, it is a "loss")?

Ideally I'd like a HELOC for the flexibility and in an effort to avoid closing cost fees. 

You need to factor in  loan fees and such as well. 

There has to be a way of creating a network of low margin, high volume “ sale by agreement off network by owner” real estate transactions where the fee anticipates 2 transactions in a short time i.e the buy then the sell....

Be aware that if your family member decides not to pay you all or part of the agreed fee, you will have no legal recourse because only a licensed broker can collect a fee for brokering a real estate transaction. 

My original impression of rent to own was that it’s the same as regular rental, but with a buy date and additional funds being given as option fee.

Invoice them for damages, legal fees and get the property for the next tenant.