The MG TF doesn't really have an enormous flaw with the engine, the 1.8VVC engine is by most merits a fantastic engine. It makes decent power at least, something which the MX5 lacks.
HGF needn't be a huge issue, as long as when its repaired two important things are done; Liner heights are checked, and a coolant level sensor is installed. These cars are fantastic value for a reason, that is because MG/Rover went bust and peoples reservations about HGF issues, this value easily allows you to factor in the repair cost of doing the HG properly with plenty of change to spare.
I mean FFS, £1500 for an 03/04 car? This money won't even buy you a MK2 MX5, which is fine, I personally prefer the MK1, but if you're not looking for the particular driver experience offered by the MK1 MX5 then the MG TF is better in every possible way.