I will admit that even by my standards, that thing is pretty rusty. That said, it's kinda weird how some spots on the frame and other areas really aren't that bad and could be cleaned up if you soak everything in bar chain oil and then scrub, sand and wire wheel a bunch of it off. but other areas are really, really bad.
Depending on whether or not you could get your money back out of it or not, or if that even matters, you could still salvage it. Swapping the axle out would be a challenge, but it would also give you better access to clean parts of it up that would be tough to get to with the axle in place. I don't mean to sound rude or mean, but I think it's going to be tough to sell as anything more than a parts rig anyway unless the axle gets fixed somehow. I guess it depends on how much time you want to put into it, what your work space is and how much you want to learn about wrenching, but if you could sort of set it aside and start collecting cheap used parts, you might still end up with a decent rig. You could always resell the used parts if you decide it's too much work and sell the truck for parts.
What does the rest of it look like? My undercarriage was pretty rusty too when I bought it(not quite that bad and definitely not so bad that the axle housing rusted through) but because the truck had been stored during the winter for the previous 14 years, the body was actually in remarkable shape for Northern Minnesota truck with only two rust spots on each front fender down by the rocker panel and another actual hole that I found after the fact that is covered by the rear bumper side pieces. Those will be easy fixes and nobody will ever know they were there since you really can't see them unless you are looking for them. My cloth interior is like new, which I still don't completely understand because the people I bought it from drove it for 250,000 miles. I am all in on my truck and have spent a good amount of money rebuilding the top end of the motor, rebuilding the front axle, all new braking system, all new exhaust, soon to have a new fuel tank, skid plate and filler neck, etc. I don't regret it because I did all the work myself and learned a ton in the process, the truck runs and drives perfectly and even if I did go down south and bought a clean truck, I would probably would have ended up doing a lot of that stuff anyway. My truck will never be a museum piece, but I bet it has as many years to go as a driver than it has already racked up.
Your truck is still a Land Cruiser and even though it needs some love, it still might have a future for you if you can muster the energy and finances to make it happen.
Good luck with what ever you decide!
