I can relate to judging yourself based on the present. It can be hard to be hopeful or patient for a future that seems impossibly far away.
As to job hunting there are two issues I feel are very important to consider (if you're sick of being given job advice feel free to tune out by all means).
The first is to focus on jobs that you want and feel enthusiastic about. You mentioned taking the job offer would make you feel worse. So why apply? I get practice is great but you're also putting a lot of energy into something that you don't even want.
Second... Think deeply about selection criteria and examples of how you meet them but make sure what you write is fair and right for YOU. So often I have heard people talk about how they have changed examples (or even made them up) to get a job. But it is not right and employers see through it.
The first job I applied for after being unwell is my current job. I refused to be "creative" with my CV. Actually I was warts and all about my medical conditions. When hubby read my cover letter and CV he was horrified and said bloody hell I hope you haven't applied yet (I had).
I figured I want to be employed by someone who sees my worth as I am and doesn't see mental illness as a weakness. Why shouldn't I be honest and ask for what I want too? My boss is amazing and she is rewarded by employees because we are thankful for her, are committed to our work place and work hard.
Don't be ashamed to say you don't have the exact skill they need. Add the example that suits best and follow it up immediately with but I want to improve and I can start doing ..... to get experience in that as soon as possible. Better yet start a course. For example if they need a first aid certificate enrollment and list the approximate date you will have this completed by.
I think people forget the relationship between employer and employee goes both ways. They want to find someone who fills their needs but YOU are also reviewing the employer or company to find work you feel passionate, proud and enthusiastic about.
I've noticed that people respond with interest when I value my own worth as an employee. You have skills and experiences that are unique to you Mitch. What is wrong with aiming high for a workplace you want to work for long term?
People tell me often I am a dreamer and that this isn't realistic. But that is BS. The type of employer who responds well is the good type to work for.
Head up and keep on trying my friend.