I am thinking of picking up a Hondo II Mustang knock off on craigslist. It's from the 70's and only $200. From what I've read they are with much more than this and are highly collectible.

The literature on these things is all but nonexistent. I was thinking of buying it to hot rod as a project, throw some hot rails in it.

Is it even worth it? Anyone familiar with these things?
Play it first, alot of those are really bad guitars, but there were a few that were nice.
2002 PRS CE22
2013 G&L ASAT Deluxe
2009 Epiphone G-400 (SH-4)
Marshall JCM2000 DSL100
Krank 1980 Jr 20watt
Krank Rev 4x12 (eminence V12)
GFS Greenie/Digitech Bad Monkey
Morley Bad Horsie 2
MXR Smart Gate
If it's collectible then you might regret hotrodding it later.

I wouldn't even hot rod an American Standard Strat. That's what Squier is for...
Speaking from experience, even $100 is too much for a bad guitar. On the other hand, $200 is cheap for a guitar you really like and plan to keep. Be very cautious of buying vintage guitars to resell for profit. Its really easy to make mistakes and lose money. It all depends on what your real objectives are. It will be very frustrating if you are not enjoying the guitar while you have it, or completely excusable if you are having fun with your hobby.