I'm curious if the bike shop actually has an idea of what the problem is or if they're just trying to gouge.
Those bikes are known for melting the stator connectors, so I'll pull the side covers and look for the connector with three yellow wires, check for any discoloration or melting. I'd also put a multimeter on the battery and see whether or not it's charging - idle, 2000rpm, 5000rpm.
Is the headlight flickering on and off or just dimming? Does it dim in sync with the revs dropping or is in independent of the engine speed? Based on the given symptoms, it isn't necessarily electrical. If fuel flow were restricted, the bike could idle fine for a few minutes but then bog down as one or two cylinders started running out of fuel. The dropping engine speed would cause the headlight to dim. The fuel system on the Sabre/Magna is complex (well, compared to the Nighthawk's single fuel line). They have a couple different lines of different sizes, a filter, and a pump.
These bikes were also known for low oil pressure causing excessive pitting on the cams eventually leading to cam failure. Unless an oil mod has been installed (unlikely, but if so you'll see two flexible oil lines coming from a spacer installed before the oil filter going directly to the heads), the only way to find out cam condition is to pull the valve covers, which is the pain in the ass and requires pulling the cooling system.
Cams going bad:
Knowing that the bike needs some sort of mystery work and that you're taking a gamble on the cam condition, I wouldn't pay much more than $500-600 for the bike, especially since you can find V65 Sabres in a great condition in the $1000 range.
