Welcome to the board! Regurgitating is "feeding you" behavior and shows she sees you as a mate.There are way more experienced folks who can help, but I will toss some ideas out. I don't think you are supposed to touch them anywhere but the head--at least that is what I understand with my grey. Never under the wings and not around the tail. She may be seeing the blanket play as like nesting/breeding behavior. I think you also need to respect her space and pace. Continue to reinforce the positive behaviors. If she is warning you or backing away, she doesn't like what ever is happening and it may make her feel unsafe-so a bird will use fight (bite) or flight. Focus on what she does enjoy, she seems food motivated so reinforcement should be great.
@Macawnutz has a store with great toys, it seems her macaws like wood as toys for shredding and foraging- so even if you don't buy from her you can see what her macaws like. My Grey loves her toys. My grey also wants some of whatever I am eating (no onions, garlic...bad for them), birds are social eaters so sharing a meal is important to them. Every bird is different and Louise can be cage protective-I can break her out of that mood by singing to her (I am a terrible singier- I think it confuses her which gets her brain off protecting the cage). There will be a strategy that can help and others can offer great suggestions. I have read others use strategies of getting them out of their cage and to a play stand-similar to what you have done. I am sure folks can give some pointers to help you with reinforcing behaviors and play that won't lead her to thinking you are a mate. You mentioned her face turns red, Louise does that when she is overexcited or angry-I always take it as a warning. You seem to have a good way with her and she wants to be with you. You do have some fun toys for her and the play stand is awesome. She is a very beautiful bird and you have a very nice, calm way of interacting. She must trust you, any macaw I have been around hasn't trusted me and only lunged and bluffed--which worked, I backed off. How long have you had her? Is your mom still one of her caretakers? Sorry to hear about the flood, it sounds like it was horrible.