What about something like parnet from 500 to 1200 or maybe even to the? Or a nullmodem serial link and some old-school terminal programs?
I don't know if that could come out cheaper than a PC SCSI card or not, and would be slow as heck in comparison. But might be an option.
I don't suppose you have a SCSI card for the A1200?
Also, since both floppies are shot, that might indicate a bad CIA chip in the A500. You might try swapping them around (there are 2 of them) and see if the symptom moves somewhere else... Or tear apart both Amigas and try the A1200 floppy in the A500? (I don't know if that would work well or not)
Just a few wacky ideas...