I'd rather pay less and just buy the frame... but all in all, the price is reasonable assuming nothing needs immediate replacement.
FWIW, I own a 98 Paramount and intend to pick up a Peloton from that period at some point. $600 is the absolute most I'd pay, expecting new chain/cables/housing/tape/brakepads and absolutely no rust. How much wear and tear is on the rims and tires would be a major consideration too. I'd start around $600, deduct everything that is close to needing replacement, and make that as an offer.