As a counterpoint, that is just the sort of bike project I look for. Granted, I have a supply of parts from other bikes to work with but I enjoy bringing something back from the edge, so to speak.

But I would say no to geared - too much needed. Yes to FG or SS. Ok but not great blank canvas. Good for the experience of building.

The frame looks ok rust wise. You would be amazed at what one can look like once it has been stripped and sanded. Seat tubes can be a pita but a large pipe wrench, WD40 and patience will do wonders. Headsets and old BB's also have a way of looking crappy but still being serviceable when cleaned and repacked. Ball bearings are cheap.

You will probably need new pedals and maybe a wheelset. Both of those can be transferred to other bikes as you go along so it's not like you are throwing that money away. Same with most other components so if you build with that in mind it's more like choosing parts you want to take forward from bike to bike. You may not wind up with a high quality ride here but the process can be fun and educational and worse case scenario you will be out mainly elbow grease. You could have fun on this frame now and bide your time until a better quality one comes around - or you may find you like it afterall. I'm currently riding a $40 Hi Ten Apollo FG and having a blast.

The mistake people make with these kinds of builds is trying to make them something they are not by adding new high quality components instead of reusing as much of what they already have where they can because they think things have to be perfect and, as a result, spend a lot where they shouldn't. Don't pay to have it sandblasted or powercoated. Do that yourself with stripper, a wire wheel on a drill and spray paint. Repack the BB and headset if you can, pull a chainring off the crank and use it if possible. That sort of thing. I would avoid expensive parts mainly because on this bike they would look out of place. This might be more the cool conservative understated utility bike.

This ain't that "it" bike for sure but it can still be fun.