i know that the head gaskets were a big problem for this car but since the owner replaced them you shouldn't have many problems I have always heard after replacing the head gaskets on these cars they can run forever with no major issues. I always recommend using Subaru coolant because of the conditioner that Subaru uses helps from further corrosion. :-)
114k miles on a '98 model is relatively low and several major components have been replaced, what about the timing belt?
Take the car to a Subaru service or a Subaru wise mechanic and have them check it out......Then negotiate your obo......