I recently traded for an old FT-160N that has this problem. It was unstrung when I got it, so the extent of its problems wasn't obvious. But the binding is coming apart to one side of the neck, there are cracks emanating from the corners of the neck cutout in the guitar side (where the heel ought to be), the sound board is warped under the end of the fingerboard, and the neck + neck block are loose enough that they readily wiggle around inside the guitar.
I don't much mind having a project, so unless I find it's beyond repair I'll probably be happy enough with it - unless it turns out to really suck, action-wise, when I'm done.
It appears to have all the parts for the adjustable saddle. Some of the tuning keys are loosey-goosey, might try to tighten them up when I tear the tuners down for cleaning & lubing. The shiny finish has quite a few cracks in it.
I picked it up so I can try a 12-string... hope it doesn't turn out to be a regrettable decision. I've only been playing guitar for about 16 months. I figure I can always sell or trade it off if I don't like it. But I really like my Epi AJ 18S VSB and I LOVE my Epi Masterbilt AJ-500RE NS, so I expect to not hate this one.
Thanks for the post about the repair. I'm going to look at what I have when I tear it down, and either adopt your repair or devise my own plan. I had the wife pick up some Knox gelatin today, so I'll be able to whip up some hide glue when the time comes.