Condition is everything and I figure that into the price I offer.
In this case, I figure how much time and effort it will take to remove the rust (if possible or replace parts + the cost of those parts), rebuild the bearings, buff the paint, clean the chrome and as you mentioned, tires and tubes.
To me this bike is only worth $40 ($50 or $60 at most, that's giving them credit that it's a neat and uncommon bike) and that's because it needs a lot of work.
Nowadays a lot of people watch American Pickers, etc...and because of that they think their rusty stuff is worth WAY more than it really is.
I try to educate sellers as to what their bike is realistically worth and if they won't come off their price then I leave my number and walk away (sometimes I just walk away). I've had people call me weeks later wanting to take my offer 'cause they're tired of looking at it.
Most middleweights in the Houston area only fetch around $150 to $250 for nice ones (but those prices depend on the brand of bike itself, pricing bikes is really kind of difficult).
Regarding the paint, I would try to save it but be careful around the decals (mask over them if you buff the paint), no one reproduces those and they will be expensive to have new ones made (unless you have the programs and equipment to do it yourself).