I have a 2001 version of that engine. Still runs strong. Your potential boat has updated electrics and oiling pump. Much better system.
If compression and water test are OK, I would not be afraid of it. Be aware, that you will probably have to do all your own maintainence. SeaDoo dealers won't touch it and most (almost none) Merc dealers won't touch it either. Some kind of spat when the 2 companies ended their business together. Merc techs don't like standing on their heads either. There will be a certain amount of that.
As for parts, some are very expensive, but can be found. After all, Merc used that powerhead for decades. If you can get a Merc dealer to connect it to their computer and d/l the engine hours, that might be educational.
Does it have the wakeboard tower? Look for cracks on the glass/gelcoat and at welds of the tower.