it seems to me you do need to get some tax advice to be sure the direction you are going will be good for you when you achieve it. But maybe the easiest answer is to have a meeting with your dad and your sister. Be upfront about what you wanna do, how you don’t want to cheat your sister, but you don’t want to be penalized for doing all the work and increasing the value so that it’s a negative to you. She will be in on the discussion with your dad when you all agree to buy him out now. He can put that amount owed sis in a joint savings account with her with a right of survival designation so when he passes it all goes to her outside the will. I think. Actually, I’m pretty sure at that point he can just give her the amount as a gift without any tax consequences to her or him. Caveat: talk to someone who practices in that area and ignore anything I think.
Regarding your concerns about doing something shady, and while it’s not my area of law, I’m not sure you actually have a fiduciary duty as executor of the will until he passes. While he is alive, you are just a potential, not-yet-appointed-by-the court executor (if he does not revise his will).
Given that your dad can leave the whole thing to his favorite stripper instead of either of you, it is far more his decision than yours or hers in any event. Sit down with them both and give them your proposal. Your idea to buy it before he passes has a whole lot of merit - and it makes what you do with it after entirely your choice. Which is what you want. And it ensures that your sister is not cheated - and your dad is assured she will receive the money.