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Yeah, the diesels command a lot of cash. It's nuts. I've seen 2002 Jetta TDI's with 200,000+ miles go for over $10,000. It's insane.
As for this particular car, I'd probably pass. You're gonna pay too much in the end to really make it worth it, in my opinion. You'll want to just replace the head while you're in there. No point in replacing stuff, only to find out it needed valve seals, or it scored a valve guide when it bent valves.
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Generally speaking, if you were to get what you really deserve, you might be unpleasantly surprised.
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