Sounds like you've done your homework.
How long has this home been on the market? If it's been over 6 months, it's most likely overpriced.
Given your description, I'd go ahead and make that offer, perhaps a little less than what you want to pay as a starting point, like maybe 170,000-175,000...knowing it will most likely be rejected. But who knows, the seller might counter with a price that's closer to reality.
As for "insulting" the seller, the real insult is pricing the home way too high to begin with.
As for the upgrades already done, these things don't up the value as much as many sellers dream they do. The 40k kitchen might be worth 32-35k AT BEST. Same with landscaping...not worth as much as the seller paid.
If or when you make an offer, point out the work that needs to be done yet as part of the reason for your offer, along with the comps and the taxes to back up your reasoning.
Most IMPORTANTLY: be prepared to walk away...don't become emotionally attached...there are always other houses for sale. Be patient.