I am seriously considering purchasing a used 98 7 series. I have a few questions that I was hoping some of you could answer for me.

1. 740i or 740iL? (750 is too expensive :) ) What is your take on the performance tradeoffs as well as space in the long run?

If your going to ride in the rear seat then get the iL. I have a i and the back seat has plenty of leg room for adults. Finding an i is more difficult because most 7's are sold as iL's.
If you choose an iL don't rule out 750iL. I've seen them for sale at only a few k$ more the the 740iL

2. What are the maintenance issues with these babies? Can I do any work myself?

Oil & filter change, brake bleeds, coolant change, brake pad & rotor change are all pretty simple. You will want a service indicator reset tool.

A paper ETM (NLA) for the E-38 was only made for the 95 model year and it doesn't have component locations. ETM on CD-ROM comes with the MoDIC (diagnostic computer) running Linux @ $12k + Diagnostic & Coding software @ $380. The repair manual TIS(includes service & repair bulletins, etc.) a must, is on CD-ROM and is pretty good however it is designed for BMW trained Technicians @ $112. Technical Training Manual on CD-ROM @ $154. 740 Technical Documents for emission system @ $280. The parts catalog on CD-ROM @ $98

3. What is a good price for one with less than 45k miles? When do problems start to occur?

Retail is $45K. Wholesale excellent condition is $35K, fair condition is $30k I assume they sell at at the auction for less.
You might be able to buy one for less than $40k.
I purchased mine in Nov. at the end of lease for $40k from the leasing dealer with new pads & rotors installed, as certified-used and a 6.9% loan. My lease residual from a 5/98 (30 mo.) lease was almost $45k and with excess milage it would have cost me $2k to walk away. There is a glut of 7's on the dealer lots and the trade-in value low due to the excess. I purchased mine new because I was unable to locate a quality used 7 with the ext/int color and options I wanted. I optioned the $61k MSRP, 7 series with comfort seats, premium sound, self-leveling, electric sunshades. The out the door price was around $73k.

In 40k miles, I have only has a couple of minor and common electrical problems covered under a Service Bulletin.

4. Is getting a 'certified pre-owned' car worth it?

Be carful, Most 7 series, as certified used, on the dealer lots were leased by the PO. I found many of these certified used 7's I looked at had been abused and the body and/or paint repairs were sub-standard. Also with the Free maintenance most have only had 2 oil & filter changes up to 30k + miles, maybe 3 up to 50k miles. Now BMW recommends an annual oil & filter change at a minimum. An extended warranty for the 7 is a must even if you purchase it from an insurance company.

Thanks in advance!!
Hokie