General car advice is the minimum you should spend on a used car is at least $5000. And that's if you're really lucky. If you want a problem free used car for a usable amount of time (3-4 years) then you need to go up to at least $8000.
edit: Wanted to also point out that banks won't lend on cars that old or cheap or decrepit. Someone in that position who needs a car to get to work, has no option but to pay cash.
I haven't sold in that price range before, but I imagine at tax time there's some cars being bought for that price, certainly.
But no. I ended up selling it to a lady whose car had been totaled in an accident, and $1200 was what the insurance pay-out was. She had never driven a manual transmission before, so a Honda was a good choice for her to learn on. It was painful to listen to her grind gears as she drove away, though...
And that's ignoring all the other things that may affect the automotive industry over time, such as different regulations causing different materials to be used which can greatly affect how long the cars from that era may last. I own a car from 1973, I'm in no way confident that the same model car in 2015 will still be drivable in 40 years.
As to your last point, I have no reason to believe cars aren't lasting longer and longer. Engine life is determined more by use than age. (Do you have a million miles on your 40 year old car? Probably not)