^I have parts off his old car on mine.
Pros: Stupidly simple to work on, parts are ridiculously cheap, you can find ANYTHING in the junkyard.
Moving on to how they drive? They're great. VERY nimble, and they feel way faster than the 127hp would suggest. Partly because of weight, gearing, and just the OMGWEEEEEEEE factor. They love being beat on. Mine seens 7k rpms everytime i drive it, and i feel no apprehension seeing that needle zing towards rev limiter.
Cons: Aftermarket is a BIT weak, but really not that bad once you get involved in some of the communities and figure out where they're getting parts. There's all kinds of neat and cheap tricks to get around some "issues." The brakes are NOT spectacular stock. Not much surface area on the rotors. That said, i've now got stainless lines, EBC Greens, and brembo blanks on my car, and it's much better. The pedal feels strange to me coming from the Celica, but i put that down to differences between cars, rather than anything wrong. The transmissions aren't REAL strong, but adequate for stock w/ bolt ons.
As for cars you're looking at?
The Protege (like you said), the Escort GT, the Escort LX-E, and the Tracer LT-S. They're all the same car. Get the Escort if you want 2 doors, choose your poison on the others depending which you think looks better. (If you like REALLY funky, look for a maroon on red LTS, it's BALLER.)
Suspension options are out there. The 3rd gen ZX2 S/R struts will fit a 2nd gen without much modification, and are cheap. $200 shipped from Jegs, and they're a HUGE step up from stock. Corksport carries some goodies for the car, and strut braces can be found on the cheap. (I paid $30 for a f/r set.) Suspension techniques makes swaybars for the car, and there's often group buys for other stuff. Delrin bushings, delrin endlinks, etc...
Power? Intake, header, and exhaust will wake it up nicely, and it's a great sounding motor (which you probably already know, being a Miata motor.). B-code FC RX7 VAF will give you a nice little boost in higher end power, as well. Run two exhaust cams in the head (exhintake mod) for another nice boost.
All i've done to mine currently was bump the timing, and even with a full interior, it's miles faster than my 5sfe-powered Celica, which is gutted to the extreme. It feels like a mid 15s car. (Will verify in spring.)
Anything else?
I would compare this car VERY favorable to a 1g Neon, Nissan SE-R, Civic, etc...
I like mine so much that i've considered dumping the Celica for another one, since the girlfriend drives mine, but she slapped me when i mentioned it, so i have to keep the Celica and just steal the EGT whenever i have the chance.
Oh yeah... the 2nd gear in these things is REALLY long. It's rather strange the first few times you drive it, you feel like you'll NEVER get the 1-2 upshift down. I imagine that would be good for rallycross/autox, though. On the flip side, 3rd gear seems pretty short, so you get that cool sport-bike-like sound on a hard redline 2-3 shift. WAAAAAAAAAAAAAA---BWAAAAAAAA
Sorry if i'm a little rabid. I got mine for $700, and once the new tranny was in it, it's been the best cheap car purchase i've made in a LONG time.