I'd offer less than the asking price. I see a little rust and a dent in the pictures, no telling what you'd find up close. Mileage is high, but that doesn't necessarily mean it's about to fly apart. Things I'd look for are neglected items like ripped grease boots on ball joints and tie rod ends, ripped CV joint boots, motor and transmission mounts, hoses, and serpantine belts. Small repair costs that can add up.
As far as the motor rebuild goes if the motor isn't knocking it's not out of the realm of possibility that standard sized main and rod bearings will get the job done without added machine shop costs. I'd venture to say it the block would need to be bored for oversize pistons though. I mean you could cheap out and cut the ridge, hone it, and put new rings on, but I wouldn't go to the trouble of a tear down if I wasn't going to do any better than that on a motor with those miles. Other items to consider during the rebuild would be a timing set with a GM tensioner, oil pump, and lifters. THAT covers the bottom end. For the cylinder head you could have a machine shop do a valve job on it, pressure test it, and surface it. Or cheap out and just put new valve seals in along with pressure testing/surfacing.
As you can see the cost of rebuilding an engine can vary greatly depending on if you're going back to factory specs or just good enough. Finding a lower mileage engine out of the junkyard is another option, although you never know how well it was taken care of. If the motor in the car runs smooth and doesn't sound like a diesel I'd just drive it and keep up with the maintenance. What I would consider to be possible repair items on the motor to look for would be the timing chain and noisy lifters.
