I know that the interior has been striped down to studs which might indicate water damage and possible mold remediation.What should I look for?

I won't deal with a carrier that needs to do pictures or individual policies on each home.  

It should not be too different than a 4 plex with a few basic assumptions like similar age etc.Are the units individually metered or is it all bills paid?  

Shop around a bit and you will find someone that will work for you as an individual and not charge the insurance rates.

You said the neighbor offered $80K for the short sale, but didn't indicate the current status.  

Without us, damaged inventory would stay put a lot longer and both the individual home owner and the market as a whole would suffer for it.

To put it in perspective, this article was recently published (8/11/15) on Nola.com indicating that home prices are up 46% since Hurricane Katrina http://www.nola.com/business/index.ssf/2015/08/new_orleans_home_prices_up_46.html.  

Of course, the tenant would still have to fill out the individual landlord's application and give written permission for access to the reports.1.  

In Alabama, individuals can represent themselves in court. 

Unless things are different in different parts of the country but I don't think so... if you read the fine print of the warranty of tub reglazers there will be a paragraph about not setting anything on the reglazed bathtub ever again, meaning, no soap, no shampoo bottles etc... this is a pretty good indication of the resilience of the process, they are basically worried about anything on the surface for a long period of time causing moisture issues and bubbling the 'reglaze'.