If you are not trying to do an original restoration, you can just replace the axle. Some folks have ordered traditional 2,000# axles and added electronic brakes. Most axles can be had for under $150.
Personally, I don't think it looks that bad. I saw a guy hook an electric drill with "some" adapter to spin the spindle, and put polishing compound on a cotton rag. He spun the spindle and held the rag on it until he smoothed out any rough areas. It didn't take much. Just MIC it out and see how bad it is. If not, I would smooth it out, replace all the bearings, races, and grease seals. Pack the heck out of it with grease and reassemble.
If there is a trailer or axle shop in your area, consider having them just replace the spindle. They can cut it off and weld on a replacement. Cost is around $70.