Uh, what!? Apple sold over 50,000 Mac 128Ks in the first 100 days, 72,000 units by April 1984 and 60,000 units alone in June, followed by steady 20,000 units/month through the end of the year. The 128K was sold for over 21 months all told.
There's nothing "rare" about them. The Macintosh TV, now that's rare, along with the Lisa only selling about 10,000 units each before being discontinued and even they turn up on eBay all the time.
As for upgrading to be useful, I would say it's odd that for 9 months the 128K had record sales despite the fact it was useless. I use my 128K several times a week and I assure you it is quite useful, just as it was then. Could it be more useful? You betcha, but the mere fact Apple could continue to sell the 128K for a year after the 512K was released demonstrates just how useful it was. I would agree even today that upgrading a 128K to a 512K solves certain problems, mostly created by Apple by intentionally leaving it behind, but for what it was marketed to do, it was amazing then and a fine computer still. You want the computer to do more? Buy a more powerful computer just like you do today.
As for upgrading it to a 512Ke, the 128K in it is certainly NOT dead. The beauty of that upgrade is all one needs to do is replace the drive and logicboard and voila, it's a 128K again. It would be a much more difficult proposition if it had been upgraded all the way to a Plus. I swap my 512K board into my 128K case all the time when I need to test things. Does that mean I kill it every time I swap it? The time to mourn a 128K is when its been mutilated, turned into a Macquarium instead of restored.
As for expecting $240, the guy is either an idiot, greedy or both. I've seen entire stock systems in their original boxes with literature sell for less. He's clearly trying to get as much milage out of it being a 128K as possible, when nothing could be farther from the truth. These eBay guys make me nuts with their branding common items "rare" all the time, because some poor fool will fall for it.