Knock the rust and corrosion off with a wire brush and then assess the damage. If the spokes and other places don't have large pits or are materially thinner in places then maybe just leave it be or spray some paint on it to make it look better or some preservative lubricant just to keep it at bay.

How much longer will the child be able to fit this size bike? Surely a new bike will be in the works soon enough.

I'd also think you'll find a replacement wheel less expensive than replacing all the spoke and nipples.