Concerning the damage done from hurricane Katrina, I do you know much about insurance payouts, but if it possible I would take the money that I got from the damage in my home and move elsewhere. If some random law prohibited that, I would try to fake my death (hey now would be a good time, just tell you family that you died in the hurricane), and move some where else...Or...Lobby for the government to change the law.
I would look at the flood patterns and if you place was in the middle of all that I would ditch it for higher ground, like Colorado. Your property values, most likely, are not going to go up, so the most money you can get will be from you insurance company. If you property values are not going to go up, then you are sinking money into a bad investment. You will not be able to sell the house for what it is worth, so you could end up side down on you loan. Even if the insurance does not pay the full value of you house, the money could make a good down payment on a house somewhere else.
If I was a long term investor, I would offer people a low price for their "unimproved land\as is", and buy up as much land as possible. I am sure eventually people will forget this disaster, though it may take a generation.