Diamond plate - especially on the rear quarters and below the doors, is always a warning sign as those are some of the most common rust areas on the FJ40. Even assuming it runs reliably, shifts smoothly, and brakes properly, check it with a fine tooth comb for rust - the most obvious places (behind the plate) will be under the rear sill. Make sure to check the spring mounts and wheel well areas of the frame.
To put it into perspective I purchased a running, driving, rust-hole free (lots of surface rust) truck for a little under that price. Similar features (350 engine, etc.). I think the price is a bit high - unless it's rust free under that diamond plate.
If you're building it to wheel you may not care about rust, but if the body's shot I wouldn't pay close to what he's asking.