I guess it all depends on what a 36 is going for in your area but for th condition you describe, I'd probably walk away and look elsewhere. You don't say if it is a snub or a 3". I paid $350 for my snub which is a plain no dash - i put Pachmeyer (sp?) combat grips and it is one of my favorite CCW. It was a pristine"shock drawer gun" when I bought it. I paid $300 for my 3" Model 36 which had very light wear on the blue from carry but it had been shot ver little - it had been an "off duty" carry for a former LEO and his widow had sold it to the LGS.
Tshe pitted chambers would also give me cause to ponder on it as it could give a problem on spent casing ejection as already mentioned. It sounds like the previous owner just didn't take that good of care of it. If you walk away, keep looking as 36s are out there
I reload and cast as well. Both of mine shoot very well and both are easy cCCWguns. The 3" I have makes a great woods gun. Besides 38 special, I also load 38 Colt Short and Long. I shoot a lot of 38 Colt Short out of the 3" using a Starline Colt Short, a cast 120 ish grain round nose slug over 11.8 grains of Red Dot. A heap round and lots of fun for plinking and varmints.
Good luck in your search. Any chance the owner would let you shoot some rounds to try it out - that wy you could check on how th pitted chambers work - there is always a chance they might be just fine. Then you could decide if it's worth making a counter offer, etc.