Honestly, I wouldn't track without a welded aftermarket roll bar, but some events do allow stock bars only.
The S is an amazing track car. You can get it for a grand less than what you quoted if you are near any of the dealers involved in this deal:
http://marketplace.s2ki.com/docs/2004S2000/index.php
I don't think there's anything crazy about trading 'down' for a car that is going to be primarily a track car. In fact, you might even consider going to an older, used model for a track car.