If that's all that broken then it's a great catch for $500. You can buy a whole new keyboard and installation is easy to medium, but I've heard of people walking into Apple stores and getting a single key replaced for free.
I had a 1.83 and had a bunch of problems with it. If you're 100% sure that the only problem is that key then yeah, it's great deal and a easy fix.
I would recommend asking him to have some sort of diagnostic program (Techtool, AppleJack) on the laptop, meeting him, running it, and buying him a cup of coffee as you wait. Just do the short or medium length test which shouldn't talk too long.