What a fun thread.
What is that rusty frame tubing made from? The thinner the tubing (typically, the higher the quality), the more compromised a frame can get from corrosion. One of the benefits of riding a super thick, chunky gas pipe framed bike
OP, that frame is likely save-able, but sometimes we also want a new project! There are a zillion different directions you can take it. Are you located in a place other than the USA? If so, maybe you can tell us what type of bikes or bike projects you have access to and that will help.