TM filed but Domain Name owned

In short, I have a business with the Domain Name and a business just filed for the TradeMark rights to the name. By all the information that I can gather it looks like I have community property rights to the name. I am going to file a Notice of Opposition to the TM but would it hurt me later if I contacted the business and asked them if they wanted to buy the name from me for an un-arguably reasonable price?

It might hurt you later, but losing the rights to the TM might cost you in the long run. This area of the law is changing, and if TM dilution gets strengthened as a legal cause of action beyond what it is now, they may then eventually challenge you for the name

I am not really sure that I understand what you meant. Do you think they could actually get the Trademark approved? Even if I had my business before they had theirs and that it would be obvious that they knew I existed? I can prove that they knew beyond that my business existed, by comparing the dates that they registered there version of the domain name and the date that they filed for the TM.