Two rental rooms and home office in primary residence--specific deduction/credit types

Hello! Long-time turbotax user, first-time poster.

I rent out two bedrooms in my primary residence, plus have a home office. I understand that certain expenses (utilities, whole-home repairs, trash collection) will be deducted based on square footage for those rooms.

However, certain items like new insulation for the whole home incurred a cost higher than the Energy Efficiency  Home Improvement tax credit provides for (the credit is 30% of the cost of the job, up to a maximum of $1200). $1200 is 30% of $4000.

My first question:

If the insulation job cost, for example, $7500, would the $3500 remainder be deductible, pro-rated to the percentage of the home used for rental and home office year-round? E.g., 35% is rented and 15% is office space, would that be a $1750 net deduction?

I imagine the first $4000 is ineligible to prevent double-dipping as it's already addressed by the tax credit.

My second question:

If this does apply as a deduction, is this an impact to AGI, or just my tax bill?