Careful using that nut to turn the engine over. It's safer to pull the alternator cover off and get a nylon strap-wrench (like for removing oil filters) and turn it by the rotor. I've broken 5 advancer units by trying to unstick motor with that nut (and I wasn't turning them that hard either). Those little ears on the advancer are not very strong.
Yeah, acetone/ATF in a 50/50 mix works great.
As for the other guy with the rust in the top 3/4", it depends on how deap it was. Hone it til there aren't any pits or anything left. Then measure it and see if it's out of spec. Chances are you can get away with it, I know I have.