Okay, let me start by saying I have had successful VA closings and, as a disabled Vet myself, have a VA loan for my home. The problem is that the VA is a lumbering government agency that moves slow and is inflexible. If there's anything unusual about a deal, they often blow it by denying the loan because "it says right here, on line 2,341 that xyz cannot exist". They have failed to keep up with the times and are nearly impossible when dealing with distressed properties. Take, for example, a short sale. Typically the seller in a short sale has no money, so they cannot pay for the things the VA requires them to pay for(minor repairs, termite inspection and treatment, etc). Often the bank refuses to pay because it is a bank, and that's what they do. That gets even worse when the buyer, recognizing that they are getting a great deal, offers to pay for them and the VA says no, they will not allow the buyer to pay. Ridiculous. The VA needs to become more nimble so that it can better serve the Veterans it is supposed to be helping.
As for Realtors and sellers who refuse to take VA buyer's offers...that's nothing new, it costs the seller more (typically) to close a VA loan, so if they have an option, they will typically choose the cheaper option.
And, as a 27 year member of USAA, and holder of a USAA VA loan, don't even get me started about them!!!