I would say that with the 06 models coming out you should be looking to pay in the very low 20s. That car looks alright, but the current bid is right at the top end of what I think an 04 is worth now. If you wait a couple more months until the 06 models hit the showroom floor you should be able to get a decent used STi for 20k or less.
You should definately get an STi instead of modding. You can make a WRX faster in a straight line than an STi for not too much money, but when you factor in the transmission, brakes, suspension and other things that make the STi such a great car, it just isn't worth the money to mod a WRX. If you ever start autocrossing or doing track days you will really appreciate the STi over the WRX.
BTW I love how every used car in the history of used cars has only had "easy highway miles"
