is it in really good shape?  that'd be hard to do, unless i felt my skills were really up to doing it properly.  
my 400 looked and ran like crap when i started out, so it was pretty easy to hit it with the grinders, but if it looked nice, i would've been nervous.  
i guess it's all in the confidence you have in your skills.  have you done similar work before?  hows the paint and seat look now?  i wouldn't consider the millage/engine condition that much, unless you're chosing between chopping/selling.  it'd be pretty nice to build something around an engine that i knew had a ton of life left in it.
that said, we just got a POS 550 and bobbing it out was my first thought.....the more i look at it though, i think i'd rather see it fairly stock and bob the 400twin.