1. My P65S2 has the newest firmware upgrade from Panasonic. I also use D-Nice settings for the TV. You need to enter the service menu to do that. The picture settings are important. The set had the proper break-in and burn-in procedure. I have done all that and more and am satisfied with the picture. Since you bought it used, a lot depends on the previous owner.
2.PQ, you are comparing orange and apple. Projection TV vs a direct view plasma. I would say the the plasma is the winner.
3. I would pay the 1250 for a very good set. But that depends on the previous owner. and how he took care of the tv and was he knowledgeable enough to tweak the picture.