articsteve's bang on with that fuel economy thing. Those older 2.2L engines were thirsty big time, considering the size/weight of the car and engine.
Out of curiosity, I checked out the Black Book site to see what dealers would offer for that vehicle, assuming it has auto, A/C, power steering, 250,000 kms and has no rust, dents, etc. The result came up as '$0' which tells me you shouldn't pay more than a grand for that thing.
You should go see him in 2 weeks from now and tell him you're making a final offer of $750, cash and to call you when he finally realizes he's asking an obscene price.
Just curious... what site did you use for the black book? I used the link from the BCAA (or AAA) member site.
thanks again