But they will probably want to see a year's worth of performance before a cash-out.At least this is the way I would treat it.  

Deducting rent for repairs needs the local Board of Health to certify the problem, the landlord must receive in writing the violations and landlord is given five days from date of notice to begin repairs or contact a company to perform repairs and there is a cap to how much rent can be deducted.

Which I am projecting will cost me $6k since I am going to self perform all the work.

An umbrella insurance policy may be sufficient (vs. the LLC).You'll want to run your numbers and determine if your current home will perform well as rental. 

If you find any infractions after performing item 3, such as obvious evidence (smell or other) of smoking of any kind, start the eviction process according to your own lease terms, with careful attention to landlord/tenant law in your state.5.

What would I be legally bound to and do I need to use a licensed contractor to do the abatement, or could I perform it myself through encapsulation/wet sanding with HEPA filter?

It's the most expensive service that PMs perform and it can create liabilities for the PM if they aren't managing after the fact.

I watched my stock market account shoot wildly up and down, while this property consistently handed me checks for $1,150 each month... the rental property was a better performer.

The only other ways to determine that an appraiser may look at are:1. the performance of the property (income).2. how much it would cost to build new.I know these don't necessarily help you out, but I would always error on the side of caution in these types of situations and measure the way an appraiser would measure value.

Who are you letting down by not creating space and therefore not performing at your highest level?