I think you'll find that the entire inside of the bike frame looks like that. Take your trusty awl, and poke at the thinnest spot. If you can drive the awl through (or it feels like you could) then Zorro's right, sorry. If you can't, then you'll have to look inside of the frame at the seat tube, bottom bracket, head tube to see if there is extensive rust (especially at the bottom bracket...). If you see thin spots, then, sorry, Zorro's right. Run a steel coat hanger or spoke up into the main tubes and see if rust cascades out...if you get a lot, then...yeah. Finally, if you shake the bike and it sounds like a maraca, then...

Zorro's usually right about these things, btw.