Were you to keep it for your son, I would start by making the brakes better. Get rid of the suicide levers and replace them with something like the Cane Creek ergo levers. Then replace the brake cables and housing and the brake pads.
Can't tell from the photo how the drivetrain is, but a new chain and new freewheel would probably shift a lot better.
New bar tape is for sure.
New tires would make it ride a lot better. Check the wheels to see if they are true and if not get them fixed.
If you know how to repack bearings that would be a good idea for the wheel hubs, headset and bottom bracket. If you don't know how, this would be a good bike with which to learn.
Lots of elbow grease cleaning and polishing. You could make that bike look a lot better than it does. It would be hard to get an 8 year old to see the end-game in his mind's eye when you are starting the project, so it would be easy to loose him in the process.