Well on a project truck like that you typically lose a lot of money that is put into it... So I would say that if you had the truck, plus $15,500 invested, Then $12,000 would be fair, but I would never expect that. Honestly I think it would sell for $7000, $9000 if the seller held out for a while. I know of a 50k Gen 3 24v Cummins just 10 mins from here for $3500, so I think that $8500 for a remanned Gen 1 in 2001 is a little high. Perhaps the fact that he didn't swap a core brought the price up some, but still...
When I'm looking for a cummins though, I just want the engine... so its harder for me to judge. Labor would be excluded as I would be doing all the work.