This really isn't bad. I'd touch it up and ride it.

I have two vintage treks in the build queue: a 1983 Trek 720 and a 1978 TX 900. The paint job for both bikes is in significantly worse shape than your bike. I'm thinking of having one of the 2 repainted and touching up the other one. You'd be surprised how good a bike can look if you find (or mix) the right touch up paint.