If I buy a domain that dropped recently, but was first registered in 1997, does the history transfer with the domain name? Or is it like buying a brand new domain name? Also, what is considered dropped? And is there a way other than contacting the owner, to purchase a domain before it drops?
it's not important. Your domain name will shown as a new domain from google excepts if it has got ban from google.
If you pick it up after it dropped it would be considered a new registration and will not keep it first registered date, dropped domain names are domain deleted from the global registry that was once registered, you can contact the current owner and offer to buy the domain name, however expect the owner to renew before it drops now that he knows someone is interested, you do risk loosing if someone else picks it up before you do, most dropped domains are fair game to everyone.
As the others have stated, it would be like starting over. However, do some research on the name..maybe it has some directory submissions and backlinks the previous owner got that were never taken down
Yeah its basically like buying a new domain. If it had PR then that should be lost, though you still will retain links from other sites that were previously linking to the domain.
I remeber also when dmoz.org was fully operational that had a bot to remove the expired domains of the site after some days of their expiration
It's exactly like buying a brand new name. My advice would be look for quality names, don't just look for aged domains. Value of domains like in the quality. In regards to SEO, if the keywords are in the domain, the better it will rank in the SERP