The point is not simply that you could purchase a different bike for less (MUCH less), but rather that you could spend a lot of time dealing with one-time issues that will not help you that much in the future.

Going to the co-op and sourcing used parts sounds like a good plan. Again, overhaul the "core" - BB and headset - that must work properly before you start adding parts, and I would advise you to abandon the project if you find a French/Swiss threaded BB and no used substitute (much as I loved my Motobecane, dealing with French parts these days is not worth the hassle except on higher end bikes. You'll not want to keep those rusty cottered cranks but just for general info French threading on pedals is not a problem, as it's very easy to run a standard English tap through a French threaded crank.

Make sure you are working with a volunteer who does not just guess at what will work, and who explains to you the why of procedures, not just the how. "Turn this screw to the right" is not a helpful way to learn derailleur adjustment.