The 'Classic Mac Repair Notes' describe C1 as 'the capacitor that often dies'. A visual inspection of the Capacitor tells me that it is fine, but should I replace it as a precaution?
Would this be a suitable replacement? http://tinyurl.com/qyw57b6

On the board itself I've noticed there is no +/- for the polarity of C1. Will it work any way?

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Yes the Panasonic ECW-F2395JA is the right replacement for C1: it's a bi-polar, high frequency Film capacitor. They don't exist in radial electrolyte version like the original one anymore as far as I know. Since this capacitor is Bi-polar it doesn't matter how you mount it on the PCB ( +/- ).

However I do recommend to replace all capacitors instead of just this one and the filter caps. Do the whole board if you want it to last in the long term.

Visable inspection often doesn't tell much with capacitors unless they are clearly leaking or bulging as they can be open, shorted, out of specs, dried out,... without any visable signs.