It should be running half way well to ask that much. At least he is being honest about it with the blow by. I would just hold out for a turbo diesel. With the turbo they burn cleaner, the block is harder, and they have piston oil squirters. The engines tend to last longer because of those things. As for rust, they rust everywhere so just take a close look everywhere. If you do end up doing a rebuilt, parts are available, they aren't super cheap but they aren't the most expensive either.
Jason
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