I am all about offering low, but I do think you need to consider the value of the Isuzu generator and the overall excellent condition of the body. That could be a good indicator of how it was treated overall. Also there is the personal appeal this one seems to have to you. Art, I have been watching, and you have been willing to dispassionately write off a lot of buses that seemed like good deals on the surface.
$1,000 would be a slap in the face and he might not talk to you again. It would just piss me off. Buses are cheap right now, but there are still relatively few of that vintage that are truly straight and clean. I do put some value on that where perhaps some people do not. I say don't shoot yourself in the foot over a grand or two. Compared to the entire project,that will be chump change.
If you ask 100 people the same question, youll likely get 100 different answers. If your only looking for someone to agree with you, and wait until someone does, and if you then use that answer to support your theory, then you probably didnt need to ask anyone in the first place, your just going to do what you want anyway.
Honestly, I do put value on that Generator....If the Gen is worth $3K, which I believe it is, then the Bus is only $1500. Like you say, not a big factor in the grander scheme of things. At least I didnt think so.