If the tractor and deck are in decent shape, then $500.00 isn't over the top.
Deck bearings are a normal wear and tear item and they are cheap to buy.
You have a Kohler K301 engine under the hood and these engines do not cost a lot to rebuild. You will find kits on e-Bay consisting of a new rod, piston, wrist pin, rings, gaskets and seals for around the $100.00 mark. I suggest that install new valves and valve springs along with a new governor gear.
Any competent machine shop can grind the valve seats, replace the valve guides, lap in the new valves, deck the block, mill the head, grind the crank throw and check the camshaft to make sure it is not twisted and that the lobe profile is to spec.
If your engine has governor gears, then either buy new ones or just toss the old ones out.
Whether you realize it or not, the replacement tractor for that 222 will cost you over six grand with no deck. That is the sort of quality that comes with a Case GT.
If it is an untouched 87, then you should see Anniversary stickers on either side of the dash tower. As for the hour meter, do not believe what you are reading. A reasonably cared for Kohler will last double that figure and still give good performance.
Wave 4 Presidents under his nose and see what happens.