That is a GREAT offer for your Camaro. Take the money and run.
You can find decent LS1 cars in the 5k range. I think it was wnaplay that posted a link to a Hugger Orange 6-speed '99 Camaro SS last month, high miles but in nice shape, asking price was like $5500. Someone had a silver Trans Am for sale on here last year that was even less. I believe Patrick listed his '98 Z28 on here for a really good price earlier this year.
And if you want to spend a little more for something <100k miles, you can find a really nice LS1 f-body for 7k, pretty much anywhere. LS1tech would be a good start