Yes - it's not illegal and you are right that it was because we had a bigger haunt. I was initially checking with him to see if we were covered in case of a lawsuit and he specifically said to not serve homemade foods (also don't advertise). The insurance wouldn't cover if someone became ill.
I love your creations and you are way ahead of where I was when I first started. What's neat about tombstone building is that every year the bar get raised higher and then they show how it done. That, in turn helps others build on the knowledge learned. Haunters are the most amazing people.
Many times I use acrylic paint (artists' paints) for details after it was base coated with Drylok. Because you used exterior latex paint that would give it the same protection so you are good there. I've never had problem with the details paint effects washing away so you shouldn't be concerned. You are good to go :)