I think you offered an excellent price to what it was worth.
I recently purchased the June 2004 dual 2.0 with 5GB ram, and the ati XT800 card for $1,000 Canadian on Craig's list and thought at the time that was fair value. I've added more Ram, replaced one of the hard drives - and since it is almost 5 years old, I'm looking to get a spare power supply.
These are extra expenses that any prospective buyer is considering when buying an older machine. This is why I cannot understand some people asking for so much for their G5 - even though I think they're great. They might need a little sprucing up which adds to the overall expense. The software is moving to Intel, and by the time Snow Leopard arrives, it is going to get harder to convince people to buy into the PPC machines - except for the die hard fans who want to continue to use the excellent software that we have.
Don't feel bad. You got a fair price and made someone very happy that will cherish your G5 for many years to come. I know I am grateful for the machine that I have bought from someone. In the end I think he was pleased that he found someone who knew the value of what he was getting and would take pleasure in it's continued usefulness.
Mike