Interesting older frame. Probably dating back into the late 60's to mid 70's.

I'm not sure that the Italians ever adopted the 27" wheel size, at least on road bikes. So, that bike could have been designed for 700c sewups.

For my old Colnago of a similar era, I usually run 25mm tires on it, although I think I've had up to either 32mm or 35mm tires on it which were a tight fit.

My Colnago frame is "square", with a 60cm Seat tube, and a 60cm Top Tube. And, with some hunting, you may be able to find a 60cm x 60cm frame, although that 62 may fit you too.

As far as your frame. The headset may be toast. But, the light rust on the frame shouldn't be a big problem.

Do you have a better view of the triangle shaped decal on the seat tube?