Scrap it. The cost to repair and repaint the frame would far exceed its value.
As you've discovered, you have to be very careful buying used frames. I have bought two used frames on-line that turned out to have crash damage similar to yours -- mostly likely from front-end collisions. In both cases, I was able to return the frames and get refunds but it was a hassle. Both were Eddy Merckx frames and it was hard sending them back, but after I got an estimate for repairing the tubing and repainting, it would have cost more than simply buying another frame.
Last edited by tarwheel; 03-08-11 at 08:47 AM.