To get right to the point of your question "Is a Lease to Own a viable option in the Coeur d'Alene area?", the answer is not really unless the home is in the $750k and over price range.
Sellers will almost always prefer to be cashed out if they can. The reason they will consider selling with a lease option is usually because they can't sell it outright under the existing market conditions. But those conditions are not present right now. With current market conditions, we're seeing upwards of 50% of listed homes in certain price points already under contract. We're also seeing appreciation of over 10% per year.
When a buyer asks a seller for a lease option, they are asking them to wait a few years for their money, but also asking them to accept today's value in a few years. If the home appreciates, the buyer receives the benefit. If it depreciates for some reason, the buyer simply doesn't buy the property, so the seller loses. So there is only risk to the seller and no upside. For this reason, those sellers that will consider a lease option will, or should, ask for a substantial option fee to be paid upfront. For example, let's say a home is listed at $150k today. If a buyer asks for a 3 year lease option, the seller should consider what the value of the home might be in 3 years. They could either factor in appreciation and set the option to purchase in 3 years at, say $175k, or leave it at $150k but ask for an upfront non-refundable option fee of $10k-$15k.
The reason that I mentioned is homes the $750k and above range still as a viable option for a leas option is simple market conditions. There are many homes in that price range that are not moving yet and sitting empty. A monthly lease payment of $2,000- $4,000 to the sellers can go a long way toward covering taxes, upkeep, etc.
Regarding your question about a VA loan versus lease option, market conditions greatly favor buying versus renting. For instance, a home with a value of $175,000 is going to rent for upwards of $1,300 per month. The payment on a 30 year fixed loan on $175,000 at 3.5% has a payment of just $785.83, and you own it.
Please let me know if I can help in any way.