Because my orders are going to be TCS (as opposed to PCS), which is different then how the active duty does it, I have all these questions and want to avoid any serious pitfalls (or going to jail ;-) ).

I purposely avoid telling new investors that investing in real estate is easy and avoid telling investors they should give investing a shot when potential investors are asking questions that make it apparent that these people are not ready to risk their money.

Some people prefer not to have someone living above them, so would deal with an additional flight of stairs to avoid the noise.

Or is there a way I can avoid that?

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everything I read says you can, but do it properly to avoid getting in trouble...

Just be careful to offer all acceptable applicants the same options to avoid Fair Housing issues and DOCUMENT everything!

If you do a 1031 exchange you can avoid paying capital gains. 

He also lived in Property A for ~2 years within the last 5 years (though he's been told by his CPA that he likely won't be able to avoid *any* capital gains because of the way his previous returns were filed.

Seller's with multiple offers may want to avoid making repairs wherever possible.- writing a personal letter to the seller highlighting your personal story, interest in the property, love of the neighborhood, etc... to my knowledge, this has not been proven to be effective.Best of luck to you on the offer!