If the husband was active in 5 of the last 10 years, the partnership was still active to both him and the wife. Death doesn't free up passive losses unless the step-up in basis is smaller than the accumulated passive losses. Unused passive losses associated with property transferred by gift adjust basis. 

I agree that getting the tax return presentation right will require multiple judicious overrides, plus a side schedule or two done in Excel. I don't think you've reached the appropriate conclusion as to what the right tax return presentation is, though.