I wouldn't ride it either- sounds like the fellow who gave it to you likes his teeth. Even though the top tube is in compression, when you finally get the front brakes working, it will be in tension when braking or rolling over a bump. I wouldn't trust that bolt to hold it. Plus the hole compromises the strength of the top tube.

Replacing a top tube and lug isn't all that bad a job, maybe a couple hundred bucks. Probably the best thing to do is to get another one with a good frame and bad everything else and make a good one from the parts of both.