The sponsor doesn't get any of their "cut" until you, the passive investor, get your 8% preferred return.If there isn't sufficient cash flow to pay the 8% most deals are structured where that shortfall throughout the project is made up on a capital transaction (loan proceed or sale) first, then the sponsor will start to get their cut on that cap transaction.Remember that in this scenario the sponsor doesn't get anything until the passive gets their 8%, if no 8% then no piece for the sponsor.   

FHA inspections typically result in "nippler" negotiations where every little item that needs addressed nibbles away at the net proceeds of the sale.

I have been offered an opportunity to invest a fixed amount in a proposed flip, in exchange for a 50/50 split of the net proceeds.

What she’s doing is important, and it seems that you’re well able to proceed and be successful even without her physical participation.

Also, I would assume it would mean you share a bit more in the proceeds too.

After complete drying proceed with your rehab.

All contracts, options, or other devices not based upon a substantial consideration, or that are otherwise employed to permit an unlicensed person to sell, lease, or let real estate, the beneficial title to which has not, in good faith, passed to such party for a substantial consideration, are hereby declared void and ineffective in all cases, suits, or proceedings had or taken under this chapter; however, this section shall not apply to irrevocable gifts, to unconditional contracts to purchase, or to options based upon a substantial consideration actually paid and not subject to any agreements to return or right of return reserved.That appears to close the loophole. 

Any ideas on a creative way to proceed?

The question would be, what do you plan on doing with the proceeds if you sell?

If you are going to use the cash-back to pay-off consumer debt, it may be a good thing.