Welcome to the forum Pyfin!
Congrats on the impending purchase, I bet you're excited?!!
The leather would most likely be an expensive replacement exercise, however there are a few leather cleaning / rejuvenation products out there which do a really good job - hard to say though without knowing the current condition. If it's not too bad though, i'd say it'd clean up nicely.
Are you planning on servicing it at the dealer (could be expensive) or a euro specialist (probably a better bet)? Also running costs might be a factor, i'm not sure how many k's the 2.8 does to a tank.
7k seems like a reasonable asking price, if everything is in good nick. You could get it looked over at a euro garage, and get their opinion perhaps - if the current owner is open to that.
Someone else more familiar with the older models might be able to chime in with their thoughts too

Good luck!
Kai
P.S. I'm not quite sure of Victorian insurance/road laws, but the larger wheels and lowering could be frowned upon - just check first, in case.
Here's a list of possible mods for your car on Fourtitude:
http://forums.fourtitude.com/showthread.php?3759781 which might give you an idea of some things you can do later on.