I don't know whether the seller is a member on here, but I think you were right in suggesting that the parts are probably available elsewhere on eBay. He invariably asks excessive prices, presumably on the basis that there's one born every minute, which sadly may be true.
I doubt whether it would make sense to repaint this frame, even though it's shabby. The value is in its name - as I don't know any other difference between this 1992 Kilauea and a 1993 Cinder Cone, it should logically have the same value once the paint is gone.
From 1993 onwards, Kilaueas had classy heat-treated tubesets - Tange Prestige Concept, Columbus Cyber Nivacrom and Reynolds 631. This initial Kilauea came out half way through the 1992 season and anticipated the new 1993 geometry, but it used a generic double-butted 4130 tubeset similar to the Cinder Cone and made up its value in the components, rather than the frame. So neither splitting the components off nor repainting the frame makes much sense really. Still a decent runabout though, just not worth all that much. As it is, and counting in the values of the Project 2, the Impact, the seat clamp and the cable guide, maybe £115 posted values the frame at around £50, which isn't too far out IMHO.
