Thanks Terry. I appreciate your careful read. I did say I wanted to steer clear of the fair rent discussion because it is easy to get into the weeds but it is an important topic. If the "generally profitable" definition of IRC §183 was the override I could drive a truck down that road. Unfortunately my understanding is that for residential §280A is the factor. I comment a bit more on in  response to another commenter. 
What was really helpful to me is your concurrence on 3115 as well as relaying history with your other clients. I think this is likely a very common situation. Some landlords are kind and soft hearted or just behind the curve. The may like or feel sorry for a tenant or simply not bother to know an keep up with the market. Unfortunately here is a regulation the Landlord is likely entirely unaware of.

I can understand what is likely the legitimate intention of the IRS but unfortunately the code does not really have the clarity it should. I very much like your take on it and give you my vote for the next IRS commissioner.