I'll take a stab...
Could someone with experience shed some light on what I could expect maintenance wise from a heavily modded/upgraded 2001.5 S4?
I don't think anyone could give you an accurate answer because it depends on many factors including the quality of the installation of mods and how hard the car was driven (like if it was tracked or just plain abused).
He's asking $10,500 for the setup, which is also scary seeing as KBB reccomends $5000~, and even taking the mods into consideration it seems high.
First I wouldn't pay too much attention to the KBB price. I think that is the case for relatively "rare" vehicles like an S4 or Avant. I recently traded-in a 2006 A4 Avant and let's just say the dealership re-sold it for significantly more than the KBB list price. I got a decent trade-in price according to KBB but in hindsight I probably could have gotten more.
Second, to get a good feel for the market I would check the classifieds in the various forums as well as autotrader, carsoup, etc. to see what cars are listed and selling for (you probably already did some research since you are looking to buy a used S4). This is what I did to see how much the Avant would go for as well as my B5 S4 (that I decided to keep for at least a few more years). Unfortunately there wasn't much data on the Avant and I probably lost out on a couple grand
Hope this helps!