A friend has recently brought me a coupla of her grandfathers/fathers guns to "restore" (An 1892 Winchester .22 and a 20's Crescent arms shotgun--she really doesn't want to fire, just preserve as "hand-me-downs"/wall hangers---probably not safe to shoot anyway). They were in very similar condition to what you've shown, and of little value even if "mint".
I used 00 and 0000 steel wool (and in a few spots, fine emery cloth), as well a wire brush (in a dremel) to remove rust (after a COMPLETE disassembly).
Obviously, couldn't get rid of all the deep pitting, but got rid of the rust. I then touched everythig up with "cold blue" (making sure they were VERY clean first), and oiled them up inside and out. They came out pretty good, although you can see the plenty of pitting if you look closely, but from a short distance, they look quite good.
It's alot of hand work, but keeping grandpa's gun (whether shootable or not) in the family is worth the effort IMHO.
P.S. In return for me "fixing up" she gave me a Model 8 Remington in .35 Remington---kinda rough but it shoots OK. 'Course I'm not sure quite what I'll actually DO with it. AND, the other gun she brought me (in somewhat better shape) was--get this-- an L.C. Smith model A-1, 738 were produced between 1892 and 1898 (this one in 1898). Ya never know what's hiding in a closet somewhere!