Thinking of making my next vehicle a used subaru AWD wagon, looking to
spend, lets say, 10-20K, but I'd rather stay on the low end of that.
That's easily doable.
So far I see that the 96-97 2.5 DOHC and the 98-03 2.5 SOHC have head
gasket issues, until replaced properly, which should be done by the
dealer.
The 96-97 2.5 DOHC has serious head gasket issues that have affected
nearly 100% of cars before they reach 120K miles, as I understand. I'd
avoid those cars, especially at the price ranges you mention since you
should be able to get a 1999 to 2001 easily within the lower end of your
price range.
The 98-2003 SOHC engines had much more minor head gasket problems that
have affected maybe 10-15% of cars before the 120K limit. It's hard to
say whether they'll affect all of those cars eventually, or might not.
I have a Forester with a 1999 SOHC engine that is showing no signs of
any problems so far, but ours has very low mileage. (Under 60K.) As
best I can tell, if you do the maintenance on schedule and put in the
radiator system additive that Subaru recommends for these engines, you
probably won't end up with expensive repairs until the engine is old
enough that they should be expected anyway.
The Outback Sport line of small station wagons/large 4-door hatchbacks
in the 1997-1999 model years had a superb 2.2 SOHC engine with no head
gasket problems, by the way. I drove a '98 OBS for several years;
despite the slightly smaller engine, they accelerate faster and respond
more quickly than the larger, Legacy-based Outbacks. I also took mine
off-road quite a bit; it can handle surprisingly bad terrain. If you
don't need all the space in a larger Outback and want to save some
money, try an OBS. You might like it.
With the Outback Sport and the Forester in the late 90s and early 2000s,
but not the Legacy-based Outbacks of those years, the rear wheel
bearings tend to fail at between 45K and 65K miles. At that time, have
the dealer or the independent shop replace not just the bearings but the
spindles with those from the Legacy Outback. I think that's what Subaru
will sell you if you ask for this part nowadays. Once the
badly-designed spindles are replaced, you'll have no further problems
with premature bearing failures.
Not sure if I'll get a manual or an auto- I prefer manual, but if its
an auto then my wife can borrow it if need be. (that's both good, and
bad

)
There isn't much gas mileage difference between the manual and the auto.
In addition, Subaru automatic transmissions work together with the AWD
beautifully, improving handling and traction. Unless you're a serious
rally driver or racing driver, you might want to go with the automatic.
Big dealer near me is Rapp in syracuse, they at present have an '01
outback with 25K for about 12K (sounds like a teaser to me).
Sounds like a decent deal to me, but I'd recommend checking kbb.com and
running a Carfax on it <carfax.com> before I'd even bother talking with
the dealer. Also, find a non-dealer mechanic who is experienced with
Subarus in your area, and pay him for an hour's work checking all the
main vehicle systems before you buy. Subarus are great cars that people
tend to keep. They're also AWD, and sometimes driven harder than other
cars. You want to be sure that any car you buy hasn't been abused severely.
Good luck!