15 years ago I bought a '75 300D with 100,000 miles on it for $6000. I paid his asking price. I wouldn't pay more than $2000 for a '75 in good shape.
In my opinion, that car was prone to rust. Anything rubber on the car is likely to bad, and the stuffing in the seats becomes brittle and falls apart. I could be wrong about the paricular car you are looking at though.
For $3500-4000, I would look for a mid 80's 300SD. The W126 body is much better and you get a turbocharger. That's exactly what I'll be looking for when I sell my current car.
'05 E320 CDI - 86,000 miles
'86 300SDL - 360,000 miles
'85 300SD - 150,000 miles (sold)
'89 190D - 120,000 miles (sold)
'85 300SD - 317,000 miles (sold)
'98 ML320 - 270,000 miles (sold)
'75 300D - 170,000 miles (sold)
'83 Harley Davidson FLTC (Broken again) :-(
'61 Plymouth Valiant - 60k mikes
2004 Papillon (Oliver)
2005 Tzitzu (Griffon)
2009 Welsh Corgi (Buba)