Thanks everyone, this advice is really all excellent (and exactly why I posted here
To confirm, I would definitely have a vet check and think very seriously about the long-term prognosis for her back. Attitude wise, she is definitely an 18-going on-10 horse rather than an 18-going on-death horse; she's got spunk, personality, and opinions, which is why she hasn't worked out in the lesson program, which is targeted at therapeutic riders. She can w/t/c under saddle, though fitness and balance is a real concern and getting her in better shape could only help her back. Someone asked about my size, and I do believe that we are compatible- she is a 14.2 Morgan (a bulkier Morgan, not very fine boned), and I am 5'3'' and about 150 pounds. I'm probably towards the top of her weight limit, but I will ask the vet that specifically.
As to the trail training issue people have mentioned- yes, I would be totally committed to working with her on it. There are places we can ride around the barn where she'd likely be kept. I have been stalking the Trail Riding thread here for months and do have a trainer on the ground to help. The only potential problem is that I don't have a lot of riding buddies at the current barn- I would love to have a friend and an "old reliable" to go out with, but I'm not sure how realistic that is.
I also like the advice to go test ride a couple of other horses- good suggestion.
And finally, Wallaby, I totally get what you're saying about the long-term commitment to an older horse. If I did this, I would with the assumption that this was her forever home. That has always been my attitude towards animals. My husband and I are very fortunate to have stable, professional careers that make this financially possible if I decide to go for it. And in my mind, at some point in the future, I would be adding another horse once Isabel was no longer rideable, so she would have a companion once we're able to have horses at our new home (just moved to a place with 5 acres).
Decisions, decisions...I am going to continue thinking on it this weekend, but so appreciate the advice so far. Keep it coming.
And now, it only seems fair to include some pictures of the lady in question (I don't have any great ones of her back without a blanket on, so these are mostly for the cuteness factor):