IMO $750 is too high unless its a turbo or in good cosmetic condition. I got a 92 eclipse 1.8 for $500 with zero mechanical problems, and a 90 laser turbo with a broken valve for $500. They were both in poor cosmetic condition though. See if you can talk him down.

If you're replacing the HG, you probably should plan on replacing the timing belt, pulleys, gaskets, etc. Probably $300-$500 in parts plus a couple days of your time if you have never done it before. Treat it as a $1,250+ car and then decide if it's worth it to you.

Also, we have a dedicated 1G forum...
http://forums.2gnt.com/dcboard.php?az=show_topics&forum=17