Yes, the 488 is obsolete.
Yes, $499 is a pretty good price, for a 488, new. I've seen them listed for about $800.
Yes, the 414 tape will play in the 488, and you can dub 4 new tracks onto that tape.
Anyone who has a Tascam Portastudio manual might have the page where it details the record head/track configuration.
According to the Tascam manual, the 488 has 2 groups of 4 tracks, 'staggered', or offset from each other. The 488 will drop 4 new tracks 'between' the 4 existing (414) tracks.
The hit you take on the 488 is on signal to noise ratio, and crosstalk, since the track width of the 488 is 1/2 the width of the 414.
Anyhow, with the dbx it should give acceptable sound quality for home use. 8 tracks is a lot to try to squeeze into a (1/8" width) cassette tape.
A larger format 8 track, like the obsolete 388/Studio 8 (1/4"), or a 38 (1/2") 8 track, or even a digital, would give you a higher signal to noise ratio, and therefore a bigger- punchier sound.
If you can find a used 388, with low hours and in good condition, you would have a better unit than the 488.
The 388 has a better mixer section, 8 busses, can record on all 8 channels at once, and uses 1/4" tape, and dbx. All this adds up to is a better signal to noise ratio, and an overall bigger sound. Unfortunately, the 388 is very very obsolete (sold in the late 80's), and cannot be found 'new'.