I'm wondering if you could get in trouble with your state board for unfair advantage - knowing the market and taking advantage of a seller with such a price difference.I'm not in PA, so I don't know the laws there.

Explain his tax advantages for owner carry.  

S#itholes can work to your advantage.

Use this so your advantage to make more aggressive offers and tailor specific deals to specific lenders.

If looking to use your retirement assets, a 401k loan could be much more advantageous as long as you can afford the loan repayments.

IRA Advantage in Portland.

Is this my potential advantage?

You could use it to your advantage to increase your rent.

Are there any loopholes I could take advantage of?

There are many ways to do such a transaction that may be much more tax advantageous than simply using up some of your father's lifetime exemption.