I love this car. Prior to this I've had a Dodge Neon, 01 Civic, and 04 MX5 Turbo (still have it), and this is my favorite commuter by far, even more than the 01 I had.
Exterior: my car was painted before, but the paint that is original has held up well. Headlights were a bit yellow, but toothpaste did the trick on them well. There is minor rust developing along the inside of the door at the very bottom, but I've treated it already.
Interior: nothing rattles or squeaks. Everything is laid out very well, although I wish I had a 99-00 for the in my opinion, improved HVAC layout, but this one does fine. AC still blows cold. No cracks on the dash, seats are still in great shape; it's a basic but solid design.
Engine: mine has valve tap, but that's normal for them. My old Civic did the same thing, but 10x worse. I feel that the 1.6L in this car is much better than the 1.7L in the 01-05. Power, well, it's not really there. I have a short ram intake on mine, which I added mainly for fuel economy, and as a reminder that if I can hear the intake, I'm too heavy on the throttle, usually after I've driven my MX5. The engine at 123k has perfect compression on all cylinders, and runs like a top. No idea if the timing belt was done, but it's on my list of things to do.
Fuel Economy: lowest I've seen was 25mpg, which was a freak tank IMO. Otherwise, I get over 30mpg between city and highway. Typically ~32, highest tank was 40.4mpg all highway with the AC on going 70-75 the whole time, with some traffic. In other words, it's a real gas saver.
Comfort/Handling: my car sits on 185 65 14 Federal tires, but surprisingly can hang on in a turn. Forget about flicking the car around and being able to cut around traffic, but in a fast turn, if you steer it just right, it will hang on well. Ride comfort otherwise is pretty good for a car of this class and price range. Smooth pavement is great, I don't get much shake in my steering even at 90mph. Makes a bunch of noise going over bumps, but that's due to the spare tire cover in the trunk flapping around.
The previous Civic I had was a later generation, which was cheapened up, and in bad ways. On this 97, I feel that the suspension, build quality, materials, and the general feel of the car is better, and of all the cars I've owned to drive daily, this has been the best.
Forget a Prius, save yourself $20,000+ and the shame of driving around in a car the rest of the world laughs at; buy an older Honda, and enjoy fuel savings, practicality, and even have some fun!