This isn't a badly rusted frame- I see NO indications of rust anywhere on the exterior of the bike. It is, however a 30 year old (pretty much unused) frame, and any rust would probably be from condensation moisture.

I know steel rusts- it's a part of what steel is- but I don't know how much is normal for an uncoated 30 year old frame interior. This is a really nice bike and a really nice, quality frame- so I think it is worth any effort into it. Most of what scares me is the corrosion on the seatpost- Although it wasn't stuck- I don't think it was greased very well when it was put in... 30 years ago.

Thanks again everyone.