(probably more bloggy than anything related to the topic, but thought it might offer you another perspective on the topic)
I'd say a lot of it depends on what you are willing to put into it. Is it worth the time to you to try and fix it? Time is always a factor. Personally, if the bike is going to present a new opportunity to learn repairs, it might be worthwhile, but if it's the fifth bike you've picked up that way, it might be a little different.
Is it worth the money that you might have to put into it? This is starting to become my personal thing, since I'm on project bike #3 (I got #1 into great condition and ride it, #2 has brake line problems right now, I almost finished out #3 this weekend, save the gripshift problem I posted about), and thinking about selling/giving away #2 and #3. If the bike was originally worth some money, it might be worth replacing higher dollar parts. But to use the example of PB #2, I found out that it originally sold for $65, so it makes it hard for me to want to throw a lot of money into it. Basically because I would have to ask the question of whether I would want to put the same amount of money into a bike that I might pay to buy a brand new one of comparable value.
Of course, the first factor of time and interest is going to play into the second of money. If I was going to go wholesale into all bike repairs and get all the specialized tools that are mentioned throughout the videos on this site, I'd be half-tempted to gut PB #2 or #3 simply to run through all the tasks that could be done. But these project bikes are getting me plenty of what I do want from them out of time: A bike to ride and plenty of practice on doing minor repair tasks (even two or three small metalworking jobs on bent bike parts).
Could I get this thing running again for under 75 bucks? I'm wondering if it's more getting rust off, or replacing parts.
But I look forward to this fix up as a way to learn without destroying my own bike.
As for your direct questions, I see a lot of rust. In most cases that's not a problem, but for your moving parts, it would be. My guess is that you'll be in for those wheels, at least a cable or two (along with housings), some new brake pads, some cleaning solvent, chain oil, and light oil and probably other things as well as you get the chance to discover what else is going on in the bike.
But yes, this is a great thing. I got less worried about messing up when I got PB #2 to work on, simply because I knew I wouldn't be out anything to ride.
Good luck on what you do, and hopefully we can see some pictures of the finished product when done!