As an owner of a pair of 780 Bertones, I'll do my best to answer your questions and the ones asked or implied by other posters.

1. What engine is in the '87 780 and what kind of integrity does it have?
This is the B280, the 3rd and final generation of the PRV-6 series. As mentioned before in the prior posts, stay away from the B27, and B28 due to poor oiling to the camshafts and a non-even-firing system that can lead to snapped timing chains. The B280 was built from 1987 through 1990 and has no mentionable issues. It's a reliable engine as long as you don't neglect it and miss oil changes. However, replacing a head gasket requires special tools and time that most mechanics don't have. The water jacketed cylinders are shimmed and sealed at the bottom and use a head gasket at the top. There are many B280s out there with over 300,000 miles, and they are one of the smoothest running engines you'll ever drive.

2. Is the engine wiring harness an issue? (on this particular '87 vehicle?)
Yes, any Volvo built from 1980 through 1987 probably has a biodegradable wiring harness installed (unless its already been replaced/upgraded). Volvo has an unusually good commitment to the environment, but this was one program that backfired on them and the harnesses start to loose insulation as they get old (accelerated by heat). However, swapping in a harness from an '88 or later B280 should solve the problem, and it should be the same as a 760 GLE harness.

3. How much time and money would this car require to own/maintain?
If you buy a 780, it's going to be your new hobby. -whether you want it or not. Less than 10,000 vehicles were built, and only half of those were imported to the USA. Used parts are VERY VERY rare for this car when dealing with sheet metal, glass, head/tail lights, interior parts, and trim. You will spend your spare time on your vacations visiting salvage yards to hunt and peck out the misc pieces and parts that you're looking for. If your car doesn't come with an intact Air Dam, you're probably going to spend a lot of time without one or be willing to spend a lot of money (between $1k and $3k depending on your parts source and labor to paint/install it). It sits low to the ground and is easily damaged by parking lot barriers and curbs. Unless the car is in immaculate condition, you're going to spend a lot of time surfing the web, checking ebay, and hoping to pick up parts cheaper than what the dealership charges.

4. "If the engine is questionable... would this car not be an excellent candidate for a V8 swap? Talk about the ultimate project -- with very little investment."
This has been done, and the head mechanic at my local Volvo dealer owns such a vehicle. Finding a replacement used B280 engine isn't that difficult since they find their way into scrap yards and nobody is looking for them. Other options abound, and converting it to a B230FT shouldn't be too difficult either (also done before). Endless possibilities abound, but if you do put another engine into the vehicle aside from the B280, make sure you have the donor vehicle sitting side by side with the 780 for wiring harness comparisons, cable routing, and all the other little odds and ends that turn up in such a project.

Finally, with all that said, a 780 is a wonderful vehicle to own and drive. I enjoy mine, but it isn't my daily driver. It's not typical, it's not flashy and thus doesn't overtly stand out in a crowd, and it's a lot of fun to go driving in with the windows down and the moonroof open. It was designed to be a true "Touring" car, and is not something that you would find in "The Fast and the Furious." The seats are 2nd to none, but the leather tears easily if it doesn't get regular leather treatments. The Birch Burl wood on the dash is real, and the sound system rivals a lot of newer vehicles (but it merits changing out the speakers if they're getting old and tired). If you haven't already read the "Unofficial 780 Website," it's worth your time to take a read through.

God bless,
Fitz Fitzgerald.
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'87 Blue 240 Wagon, 252k miles.
'88 Black 780, PRV-6, 146k miles.
'89 Black 780, Turbo4, 94k miles (accident vehicle that I'm restoring).