After much turmoil and creative thinking we made a decision. Hire a craftsman to restore the existing walls and add a fireplace to create a cozy outdoor living space.
Originally we had hoped to do a bathroom and kitchen. Then eventually add an adjacent swimming pool. Unfortunately, (or fortunately maybe) this part of the property is within a 100 year flood plane...by fifty feet or so. Thus, in order to do anything more than outdoor living space we would have to alter the original structure dramatically. This would defeat our preservation attempt.