Is this a steal for $5,500?

the 7.3 is a great engine if it was properly taken care of. They have thinner cylinder walls than the 6.9 so they can't handle as much neglect. If you aren't on time with your coolant changes, or use the wrong coolant you will burn holes through the cylinders. I prefer the 1987 6.9 idi. I think it was the best idi ever. Take a cylinder bleed down test (google is your friend, aswell as harbor frieght) and if it smokes I'd pass. Some smoke at certain times is ok, like a small puff of white and blue right at start up is normal, but no billowing. White smoke is unused fuel, blue is oil. If it spews blue walk away. It should not smoke at all about 10 sec after start up. Let her warm for like 10 min to keep your rings in good shape.