I paid $500 for a 1986 Bianchi Trofeo, 10 years ago. I suffer a similar size affliction -- my Bianchi is a 49 or 50 cm frame. I felt lucky to nab it and haven't regretted it once in all these years.
If the frame is in good shape, you can always upgrade parts as you grow into the bike. $300 for a solid steel frame is a nice price compared to spending $900+ for a new steel frame. If this Bianchi is made of Columbus steel, definitely nab it.