You can soak it in a bucket of water for a few hours or longer until it is soft and pliable and then dry it off with a towel, put crumpled up newspapers underneath it to help absorb water and to shape it and then wrap packing tape around the sadlle to hold it in the final shape you want it. Let it dry out at room temperature for a few days and then remove the tape and paper and apply either proofhide or other leather dressing as you would on a new saddle.
Yes, I have done that, but only if badly misshapen. And use cold water, not hot. Its quite common to wet leather to work and shape it. Also, they seem to be finished with a lacquer type coating; you can wipe with lacquer thinner to clean, let it dry, re-dye with black leather dye and finish with Proofhide. Neatsfoot oil might be ok, I never used but have used Mink oil with good results. Honestly, if you talk to oldtimers (and poor college students in the 60s and 70s, they used motor oil!)
The rust could be removed with steel wool or a chemical rust remover.
I've brought back some that seemed like goners; worth a try.