1. It's a fair deal if the bike is in good shape.
2.Yes a KX500 is about as powerfull as it gets, and they are very fun to ride, if you know what you are doing, and have some respect for the throttle.
3. no
4.Supply and demand. Most people are plenty happy with the 45 or so horse power of a 250. Yes the 250's are far superior in the technology dept.. Given the choices, you can go faster on a 250.
I'd pass. If you plan on riding at an MX track, or jumping at all, a 500 is not in your future. Find a 250 of about the same year and let it rip! Hope that helps, YZ165