Having said that, what I have done in my particular circumstances depended on exactly that.  

What you have into the property so far and personal circumstances has nothing to do with this property whatsoever.

Question:  Would a standard sales contract with a walk-through/acceptance after the rehab is complete period be a reasonable way to proceed to get a buyer commitment under the circumstances below?  

You can refi to change the terms of your loan (lower interest rate, remove PMI, lots of reasons) for you primary residence under different circumstances then doing a cash out refi. 

Now the business purpose behind this is the LL then can take certain increases in rent and in the right circumstances deregulate the apartment.

If it were under different circumstances that they asked, and they were not so forceful and yelled about everything then Id be happy to supply it.

Under what circumstances is purchasing an unwarrantable condo (one that does not qualify for conventional financing) a good investment? 

Mediation is an absurd notion in this circumstance.

Due to circumstances that have a long explanation (too long for this post, lol), I had to lease.

The return in this circumstance is based on the model of truly uninhabitable low priced residential property that will rent after bringing the property up to speed, and nice return on the loan interest that you receive.