Moro blade. derust or etching

[The Double D]

I'll let some one else deal with the heavy rust situation although I would continue with WD 40 and nothing coarser than 4 ought "0000" steel wool and a large dab of elbow grease.

For the wood if you want to restore it you might try Cure-Rot. It's a bit extreme but it will add some structural integrity to the wood. I know it says for wood rot, but also works for termite eaten wood.