I had this dilemma with my 750. Mine had a serious mechanical problem (head) requiring engine out. The engine looked tired and there was surface corrosion on various frame parts. But it had good exhausts, tank and side cover paint was good. It ran and I got miles on it, but it leaked oil, handled and braked like a tired bike and was generally not very happy.
I decided I needed to get it roadworthy, so I could get in some miles to know whether I liked, loved or hated the bike before doing anything too expensive. I set a budget of £1,500. This enabled me to buy a used head, get the bike running and do everything cosmetically that would otherwise deteriorate, leaving the rest to later.
I had the bores measured and honed, a sheared exhaust stud removed, the frame and frame parts were blasted, primed and powder-coated, everything else I did myself, including engine paint, a 'new' (good condition ebay find) rear hub laced on the existing rim, new steering bearings, new front brake system below the m/c and a thorough tune / service of everything I could think of. Probably 2-300 hours work.
Look closely and my left side cover has a 2" split, wear and tear patina on the mudguards, some pitting on the outside of the guages, and a split in a seat seam. But the bike actually looks really sharp and tidy and is running (and stopping) really great. I love it. It's a keeper and I will carry on to do odd projects on it, to deal with the remaining items, as time and money permit, while riding the bike. Seat has been replaced, new rear brake switch and throttle cables most recently.
This approach reduced the risk I would rack up bills then want to sell. It softened the financial blow and meant I could get the bike back on the road inside 3 months (nearer 2). That last point could be important. I never felt I got to a point it was overwhelming, nor did I lose interest, as I could see the end in sight and was keen to get some proper miles on it. I now have a much better understanding of the how the bike is put together and there's a definite bond with it. It also looks good and I'm proud of it.
Hope that helps.