The '97-'01 Rialta are all very close, possibly a few cosmetic type changes. In '02 they started using the 201 HP engine, but the rest is similar.
Sounds like a reasonable price to me, considering the general market prices reported. Mpg depends a lot on how it's driven. Real world reports tend to be around 15-17 mpg. If you always drive at the high end of the speed limit, you can expect less. Keeping it to 55-60 should get at the higher end or more. Terrain can also make a big difference.
Try to find out if it has a VW rebuilt tranny or if another shop did it. Other places often make mistakes and problems crop up.
Tires need to have the correct load index and can be difficult to find. Don't rely on a tire dealer to know what you need. The front must be rated at least 104 and the rear 109.
If you decide it's worth going after, you might want to use the checklist to get a pretty good idea of any problems:
http://tinyurl.com/or4wyt5
An external transmission cooler is a welcome addition in most cases:
http://tinyurl.com/ow4e6gq
Duane