I would appreciate your feedback on best practices or other success (failure) stories when it comes to owner financing.

I read a book by Ray Dalio called "Principles," where he discusses embracing and learning from failures as much as, if not more than, successes.

If you don't purchase the property at the correct price you are just setting yourself up for failure. 

Don't think that one particular out of state market will shoot you to success or abject failure.

If a Chicago landlord’s failure to deliver possession to the tenant is willful, the tenant may recover up to the greater of two months’ rent or twice the damages sustained by the tenant.Can I get in deep waters here even with clause 7 above?

It protects them from failure.  

I don't regret the failures at all. 

But I primarily do failure to pay rent cases in Prince George's County and I'm in Anne Arundel County much less often.  

You really need to have a system for dealing with security deposits or you can face various liabilities (e.g. being liable for twice the amount of security deposit, failure of being able to hold the tenant responsible for damages using the security deposit, etc.).

I would also note a Quit for failure to provide inspection/showing of unit with proper notice.