Cracked, faded and peeling decals aren't fixable and chances are that replacements will not be available for a '97. And it is a lot of work to remove and replace them even if you can find a matching set. More often, the decals are removed and perhaps some trim painted on.
As for fading of the sides themselves, it is hard to say. Fiberglass boat polishes are usually pretty good at removing oxidation, but sometimes the damage goes to deep and it simply won't clean up very well. Or it looks OK for a few days while the wax is bright and shiny, but then quickly dulls again.
These are cosmetic things and only you can decide how it affects the value of the rig. I would certainly expect a discount from the average NADA book value if it looks really ugly. Since you were surprised with this by the seller and not comfortable with what you saw, you were smart to walk away. You can always go back after you think about it, but once you put your money down you are stuck.
If the agreed upon price was low (I'm thinking near NADA wholesale), and you would be willing to use the rig "as is", then perhaps you missed a good deal. But if the cruddy exterior really bothers you, then no price is likely to be low enough. There are lots of used motorhomes out there, so just keep looking. The right one for you will turn up.