I'm not really one of those "leave absolutely the way it is, rust spots and all" kind of guys but it looks pretty decent. That's an interesting history it has and obviously will have to be taken into consideration. My crystal ball is in the shop and normally I don't like to speculate on anybody's future but you might also consider that one day, many years from now if you should still find yourselvs together, dad's old bike in more or less original condition might bring more fond remembrances and comfort for family members then the pain it might cause now. If nothing else, document it well so that you could return it to the original paint/decal scheme if you want to one day. It's weird the things that become important to us as we get older.