The 500s had less of a top-end oiling problem than the bigger VF models. The popular speculation is because you're up higher on the tach most of the time.
IMO, $1200 is about right if it is fairly clean.
These are a bit notorious for requiring carb rebuilds if they sit. I've had mine built at least twice (in the last 12 years) due to inactivity.

(My old '83 Nighthawk never had this problem, fwiw.)
I agree that compared to modern bikes they're a bit slow. You can still get it over far enough to drag pegs, though.
