Well, if one of those 1200's work still, you'll be pretty well off. Getting a replacement keyboard isn't so bad, and the peripherals aren't so expensive either.
Where in the world are you located?
Yes, definately fix the 1200 with the 040 processor. Sounds like you missing hardware isn't that significant and if you don't have a hard drive go comfact flash.
Emulation has its merits (and I'm a MorphOS user), but if I had the hardware on hand (even if it needed work) I'd refurbish it.
Heck, I passed up on a non-functional A500 on ebay that I could have had for $.01 (because I would have had to pay candain shipping and then fix the bloody thing). till think I should have bought it.
Go for it Dude.