These knives are generally of good steel and IMO are well worth fixing, which I've done over the years on a wholla bunch of them..
As for leather washers you can make them or buy them pre-made
http://www.knifeandgun.com/ProductDe...ProductCode=LS
For removing rust you can also use naval jelly or even better then sand
Evapo-Rust
http://www.evaporust.com/
here's one I did a few years ago - it was in real sad shape and I saved as much as possible of the original since it belonged to the gents grand dad........replaced the original handle with antler and glued it all together to prevent future problems
