This is an excellent training exersice. Lunging riders unfortunately is not widely used in the United States, but is a very common practice in European training facilities. I am just getting started. There are a lot of good books and many good videos. If dressage is your interest the series of books and tapes by Dr. Reiner Klimke and Charles de Kunffy are excellent training aids.
Most people are honest, but of course there is always the exception to the rule.
If you know the person you probably don't have to worry about that. However, there could always be something wrong with the horse that the owner was not aware of or that would not show up except in an x-ray. Additionally some conditions do not present a problem unless you are going to be doing something with the horse that would be aggravating to the problem. A vet check insures that everyone is happy with the outcome of the sale. The price varies between shows, but local open shows are fairly inexpensive, averaging about 4 dollars per class, a 2 dollar office fee and 10 dollars for a stall.