How to get the iPod Nano 5th gen battery health
Apple have software at the Genius Bars which can diagnose faults, read the current voltage, and assess the health of devices but I've never been able to find a copy before.

There is a diagnostic mode for iPods which you can access by resetting the device with Menu+Select and then upon seeing the Apple logo, press Rewind+Select. There are many tests on there including some battery ones within the Power section, however I doubt this will tell you much without a lot of research.

Basically, no, there's no easy way to test the battery other than playing a song over and over as you've stated. Perhaps you could get a quick written agreement with the seller that you'd expect the battery to be at least 80% as good as the expected battery life or something along those lines, and if not they will refund you?