It depends upon the original accident, the quality of the rebuild, the
price, and how long you'll keep the car. I don't think there is anything
about the Prius that makes it unsuitable for salvage.

My wife drives a "salvage title" Subaru. She was driving 15 mph on our
neighborhood street when someone roared out of a driveway. The accident
poked something into the engine that combined with the minor front-end
body damage to cost enough so the insurance company decided to total it.
We carefully inspected the car (with an expert), and bought it back from
the insurance company for peanuts, then spent about $6,000 repairing it
- that included a wonderful paint job in precisely the non-Subaru color
she really wanted in the first place. The warranty is void, of course,
but the car is as reliable and safe as one with a conventional title,
and since we drive cars until they can't go any further, we actually
pocketed a lot of money on the deal!

At the other extreme, a friend talked himself into buying a "salvage
title" SUV, on which shiny paint covered horrible body work, sub-par
welding, many hidden mechanical problems, and huge quantities of bondo.
It literally began falling apart almost immediately, and was
irreparable. There was no recourse, and he wound up junking the car for
almost nothing.

So, if I found a 2004-7 Prius at half market value, and had accurate
knowledge of the underlying damage, I'd probably buy it.

Not me personally, but I've read of a few owners on the yahoogroups
lists (some even did the rebuild themselves).  Main concern for most
is the lack of warranty coverage.  A few dealers may be nice and do
some of the TSB work under warranty, but not all are willing to do so
on a salvaged title.