Varsities are great bikes, but there is no reason to overpay for something like that. I bought a true time capsule Varsity once and it was in very nice shape that one doesn't look to be the case from the couple of pics in the ad. I sold it for a cheap price and fortunately a student from the college I worked at responded to the add so when he showed and I knew him up I knocked a few more bucks off the already low price. That was a couple years ago and prices have risen I could probably get more out of in now, but it was in really nice shape.

That Trek 820 looks very promising.