I found the car you're describing on Cars.com. First of all, the pictures the dealer has posted are absolutely awful. It's almost like they're using a fish-bowl lens.
I would probably avoid this car, unless you can get a really thorough PPI and a reputable (ideally one certified to work on a Prius) mechanic gives you his full confidence that there's nothing wrong.
It was a lease, looking at the carfax, which does mean that any and all damage should have been repaired and it could have been something as simple as a rogue shopping cart going full-bore into the side of the car. Frame damage is not necessarily the thing you should jump to.
I think my issue with this, like you say, is that it's too good to be true. Sure, it's not the most desirable color (a rich blue), or desirable trim (one up from base), but the miles alone should be enough for the dealer to see that it should be priced higher than it is.
The other flag is that it was for sale (briefly) on another dealer's lot before going to auction. Now, this too isn't inherently bad - happens all the time in the industry. If the original dealer can't move it in whatever they feel is a reasonable time frame, they'll send it off to auction. But it was on the original dealer's lot for less than a month. Unless the original dealer was trying to ask above KBB, it would have been a no-brainer sale.
Sometimes good deals just happen. Maybe that dealership doesn't move many Priuses and knows it has to go low to move it. Or maybe the issues it has are worse than one would expect.
It doesn't hurt to test drive it, but thinking back to your other thread, I'd still keep the Honda.