1) No, unless it's a tremendous value.
2) Yes. Absolutely.
What you've got is a problem that's likely to continue regardless of your efforts. So, that house and its problems are going to stay the way they are for the foreseeable future. It won't change.
That means it'll detract from your please living in the home you're considering buying. It also means that, when you decide to sell, there's a chance that eyesore will still be there.
So the question is: Can you live next to the eyesore? And are you prepared some day to sell, with the eyesore still there?
In less extreme cases, I've known investors who've approached homeowners and offered to have their yards cleaned up for free. In some cases, I've known investors to do that for 4-5 surrounding homes (urban rowhouses). I don't know whether you'd be willing to do that, or what the cost would be, or whether the eyesore owner would be open to that, and whether and problem would recur even if it were cleaned up. Still, that's a possibility.
My gut reaction would be to advise you to keep looking. But certainly consider the possibilities I mentioned above.
Hope that helps.