I'd say its toast, an old saying many years ago taught to me, for anything like the above or similar, if it was your car brakes and you had your family in it would you be happy....... NO
Works all the time for me, I've scrapped many a rifle and barrel when in doubt. Some I have saved and re barrelled to .22
I bought a Mauser many years ago ( Dealer to Dealer over the phone) a K98that had been made into a target rifle, in which the action looked very similar to the condition of the above, (read Bruce's post above about Mauser's) some of the pitting had gone through the hardening, luckily I only wanted the barrel as it was a Schultz & Larsen barrel, but it was the fact the dealer would of sold this rifle to anyone.................... think his comment at the time was it bears proof marks, I wouldn't of fired caps from it, barrel removed and action scrapped.