Vinyl Asbestos Tile (VAT) and the mastic used to set it can be a
problem with authorities.
The material should be double bagged, marked as VAT, & disposed of in
areas designated by the landfill folk. Using a spud to scrape up the
tile, thus keeping it in big pieces, wearing a resperator ( since it's
in an enclosed space ), closing off any air ducts comes close to
government requirements for containment.

Encapsulation, that is covering it up, is acceptable and cheaper.

The 7'-0" head room is a problem if you want to have a space called
"habitable" by code in the basement. (Sleeping rooms require emergency
escape openings in addition.).

If I wanted to make a nice set of spaces, I'd look at removing the VAT
and having the high spots ground flat.

TB