Pretty cool old warhorse. Clean off the rust-maybe use a Dremel soft wire wheel on the worst of the chrome to get it down to burnished metal- and then clear over the bare metal. The latest Duplicolor style kits have a clearcoat that's very thin with a sponge applicator, and that's what I'd use.

Hole in the stay looks deliberate, agreed might be for a cadence meter. Just clean it and plug it.

Understand your concerns, but I've seen worse made better.