I have heard mixed experiences as well on the accuracy of M77s but this particular one would shoot one ragged hole groups @100 yards earlier in its life. They have opened up to about an inch now
Factory performance of M77s means nothing.
For the majority of bolt action rifles, the 'magic' is in the barrel and its installation, with a little bit of help coming from proper inletting and bedding.
Why pay $400-700 for a rebarrel and another $200-400 in action work to get a .260 or .257 when you can pick one up for around $600?
Around here, a basic rebarrel (w/ rechamber) runs about $100. It's another $25-40 for bluing. Opening the bolt face is about $40-60, including extractor modification. (If the extractor needs to be replaced, they run about $30.)
For the M77, "action work" to go from .223 Rem to .260 Rem can be done a few different ways. None of them are difficult, expensive, or require machining.
1. Remove the "magazine fillers" and replace the follower - about $8.
2. Replace the magazine box and replace the follower - about $18.
3. Remove the magazine box and replace with a single-shot block - about $18.
Total cost, excluding the barrel: Less than $250.
A couple years ago, I picked up a Shilen Match 6mm 1:10" twist barrel for around $130, by keeping a close eye on Brownell's and Midway's clearance products.
Rebarreling my own M77 from .220 Swift to a 6mm wildcat cost me just a bit under $300, total (right around $290).
Since he can do the rebarrel pretty much for free, his total cost would probably be about $50, max, plus the barrel.
Cost aside....
Sometimes, it just feels better to bring a trusty friend back to life, than to throw it away and buy something else.