I hate seeing an EZ model GS hacked up, but since its already boogered, the GS750 motor is a great motor, and being 82, its the TSCC (Twin Swirl Combustion Chamber) We own an 82 GS750EZ All Original in our fleet of bikes, and besides my personal Cafe 850 project, its my favorite bike. The motor creates great power, and the weight and handling of it is great. I'm sure you could get him to drop the price some, and I my self love the chassis setup and combination of the 750E bikes.
Hope this helps? Sorry I can't chime in on its value, but I wouldn't pay more than $700 probably for a bike thats already been started on as a project, because you have to figure out what they've already done, and then start on what you want to do. In all honesty we haven't paid more than $600 for a "project" bike, but we're lucky in our finds.
For reference, a 1982 GS1100E all original sold on eBay a few weeks ago for over $4,000 in original condition.
I also suggest Suzuki 550E bikes, the weight of them feels like a 425GS, with the power and 6-speed of a 550-4.