I just sold one that was supposed to have 60,000 miles on it for $700...
And I just bought one for $700 ;D

because there just weren't any around here yet. Been looking for awhile, and I pretty much agree with what was said. I had been looking to pay about $200 to $300 for one I could rebuild myself (so I knew what I was getting), but couldn't find them. Rebuilt ones all day long for $800 to $1000 (some with shipping, some not) and no core charges, some new for $1500 to $2000 but I wasn't going that route. No Jeeps in the boneyards around here recently, and nobody selling them on Craigslist except for between $700 and $900.
Found a nice low-mileage one for a fair price in Phoenix last year (for a couple of hundred), but I'd have had to go and pull it out of the guy's Jeep in his brother's garage while the owner was working up in the mid-west. Just not quite convenient enough for me to work it out.
So it seems pretty much the usual "supply and demand" system at work. Wherever you can find a few, or you can pull your own from a wreck, they're in the $300 range. Anywhere they're hard to find, they're in the $700 range.
I'd jump on that $350 one (but with it's issues, make a "better offer") unless you think something's fishy.
Paul