I've had a "shell" of a website up for quite a while now and I hem and haw about completing the project so it is fully operational, mostly because I'm questioning its true value. 

We completed one flip together that resulted in profit.

But the short answer is there likely is a way to meet you objectives while completing a 1031 exchange which also preserves your option in the future to continue to exchange real estate.  

How does one word this scenario to a seller ( a complete stranger) and make them feel secure and comfortable with this process?

I have a unique situation wherein the property I want to purchase is owned by 5 siblings and they have all agreed they want the oldest sibling to sign everything on their behalf, so they want to complete a power of attorney form to give him the right to sign.

@Amber Koontz completely agree. 

Is it possible to obtain a policy that will rachet down once we complete the work, or provide a short term exemption if we escrow the funds to replace the panels immediately?

I would make the decision based on the math and protect for contingencies, i.e. make sure you have sufficient funds to complete the remodel (I like 2x to be safe) and have a plan if things get delayed or the market changes to make sure you don't get stuck with the higher rate for too long.

This can easily cause a dip in reserve funds to complete the project.

What has been your experience pre-selling flips by listing them before reno is complete?