Just to point it out if you don't already know, or have not realised; both the Xeon E3 1230v2 and i7-4670k require different motherboard sockets, so you'll need a different motherboard if you desire to use an i7 (or Xeon), hence you should consider this in your costs, if you have not already.
Xeon E3 1230v2: LGA 1155
i7-4670k: LGA 1150
However the Xeon E3 1230v3 (v3, not 2) is for socket 1150.
To answer your question, firstly ensure motherboard compatibility. If you're going with the i7-4670k, ensure your motherboard has the prefix "z" for example, Z97. The z motherboard, plus a K edition CPU (i7-4670
k) will allow you to overclock. Therefore if you're planning to overclock, the 4670k would be ideal. FYI, k edition CPU's are designed for overclocking hence have an unlocked CPU multiplier, otherwise if you're not planning to overclock, save your funds and do not purchase a k edition CPU or a z motherboard.
The Xeon is not a bad performer by any means however. It provides a similar performance to an i7-3770, but is designed for servers; hence does not have integrated graphics, therefore you'll need a graphics card to run your system.
Bottlenecks will always exist with whatever CPU your chose, however some CPU's may provide a less of a "bottleneck." However Xeon E3 1230v2 won't handicap your system too severely; it is still a high-end CPU.
If you do go with the Xeon E3 1230v2 it should be noted that it's a socket 1155 CPU, and Intel no longer produce CPU's for that socket. 1155 was also designed for Sandy and Ivy Bridge, 2nd and 3rd generation CPU's respectively. We're currently mid way on 4th gen, and 5th gen will be released towards the end of this year.
So upgrading maybe limited if you go with a 1155 motherboard. If you're planning to upgrade in the future, you're better to go with a H97 or Z97 motherboard; which are socket 1150, and are compatible with 4th gen CPU's (Haswell) and will be compatible with upcoming 5th gen (Broadwell.) With that said however, the Xeon E3 1230v2 (the one your neighbor is offering) won't be compatible, but an Xeon 1230v3 (another great performing yet cheap Xeon) will be.
All the best.