Thanks for the replies. I've taken some time to respond as I've put this project on the back burner. I did not mention that before blasting I used a lot of caustic soda to melt a stuck seatpost, and that the frame spent about 12 hours with caustic soda sitting in the downtube and chainstays as the bottom bracket holes were plugged. I figured the rust has been caused over time but maybe not?

My first thought was that given the number of holes the tube is considerably weakened. The sandblaster mentioned that the holes found are essentially the extent of the problem and that bronze filling them will do the job. Thanks in particular for those pictures of tube replacement Andrew. I'm almost tempted to just cut the tube out in pieces to see the effect the rust has had on the inside.