They're fun to shoot, but I wouldn't buy one as my "primary" or "only" AR. I have an 11.5" barreled AR pistol, which is a much more practical length in my opinion.
Really the only reason mine is built as a pistol right now is because I can't do the ATF paper work and get a tax stamp to legally turn it into an SBR (Short Barreled Rifle) right now. Hopefully next year I'll be able to get to that. In my opinion, the only real purpose of an AR pistol is to be able to have a short barreled AR in a situation where an SBR can't be had, for state law reasons, cost, etc.
I couldn't tell you how much it was worth without knowing more about the other components. I'd guess somewhere in the ballpark of $750-900 as a reasonable price range, the market is flooded with AR's right now. I'm having a hard time justifying the rationale for a free float tube on a 7.5" barrel other than that the guy just liked the looks of it. The Tasco red dot doesn't add a whole lot of value.
I am not a lawyer, but as I understand them, the ATF rules on converting a pistol to a rifle are basically this:
You CANNOT under any circumstance legally convert a rifle to a pistol. A pistol can only be built from a "virgin" lower receiver that has never been assembled as a rifle. A pistol CANNOT under any circumstances have 1) a vertical fore grip, or 2) a butt stock. A pistol CAN be legally converted to a rifle by adding a butt stock, once and only once, it can never be converted back to pistol again (legally). If the barrel of the pistol that you are converting to a rifle is less than 16", it will be an SBR and you must submit ATF Form 4 along with a check for $200. Once it is approved by the ATF and you receive your tax stamp back, then and only then can it be converted to a rifle by adding a butt stock. Or instead, you can permanently affix (pinned and welded) a muzzle device to the barrel that brings the length to 16" (which seems to defeat the whole purpose of having a shorter barrel to begin with to me).
Here is a very good thread for more info about NFA rules:
http://www.m4carbine.net/showthread.php?t=7410