Wow ,that's a nasty frame. What's the rest of it look like? Is the other parts of that frame thinned out by rust too?
I'm about to say something that I would never say but here goes, That looks like a good candidate for a hard tail.
I hope your welder is really, really good . I wouldn't even consider repairing that . tricky spot.
Truth time,
I don't want to be the pooper at this party but, I think it's time to split the engine down to find out if there is anything in it that is salvageable in there before you waste too much time and effort on something that may not be able to be repaired. If you open up the clutch side and every thing is white powder , and the primary drive bearing looks wasted.....like this
It's most likely wasted.
If you open top end and the cam and springs looks wasted.....you know
Please ,do yourself a favor , take the engine apart and take plenty of pictures of everything and get opinions here if it's repairable. At least you can get an Idea of what will have to be done, then you can decide if it's a project that you will be able to tackle and complete.