That does sound like a very good deal. I love those old Ponchos. The 326 is a great running engine. You could also drop in a 389, and it would have the same power as the GTO. The 389 is a very reliable torque monster, and can be real hard on tires when mixed with alcohol, but I digress.
That sounds like a great deal. Couple of months ago my buddy bought a 67 Le Mans vert. It was in great shape, no rust, 326, auto (2 speed), rally 2 wheels. He paid about $8,000. The guy he bought it from wanted to clone it but he only got as far as adding a GTO hood and the rally 2's. I say go for it. I love those old Pontiacs. The rust problem areas on those cars are around the rear window, rear quarters, lower fender quarters, tail light panel, trunk floor,cowl area, floor pan area by the doors and under dash, In 65 there was a problem with the rear cross member in the area of the spring and shock mounts cracking I don't know if that was fixed in the later models.