I went to test drive an STi yesterday which had a broken speedo cable and was apprently making the fuel cut off, cut in
So when he booted it, it would cut out after 4-5k rpm

Is this true, or would this not happen?

 

In the classic shaped imprezas if something is wrong with the cable it limits to about 4500rpm and lowers the boost as the ecu is reading it as a fault.
Just replace the cable and it should be fine.

 

as above it will limit the car.

personally I would let them fix it then take it for another test drive. Plenty of cars out there

 

Yes its on the classic shape, 1995
Is it the same on all classics?

It has put me off the car TBH, id rather hold out till i find 1 which is in good condition.

 

As said in your duplicate post if someone is selling a car like that what else is wrong with it.
There are so many imprezas up for sale you are really spoilt for choice.
Look in the 'For Sale' section on here or pistonheads.