These rusted on the trunk floor, lower quarter radii, rockers and the lower part of the front fenders. Pretty much the same as everything else. Looks to be a NW car that did not see any salt which is good. I hope the front fenders come with the car as they are a tough item to find. Check the A-Pillars and the rear window channel as both are a PIA to repair.
Converting this car to a modern hemi, is also going to be a major PIA. The engine mounts will have to be fabricated along with the exhaust. Note that this car has a push button, cast iron torque flight that is not ever going to be compatible with any modern engine. It also has ball and trunion u-joints which also would not be up to the task of hemi power. Doing this type of conversion will involve a lot of grunt work making all the parts necessary to make the hemi and a modern transmission fit. It might be more practical and cheaper to find another 318 poly and drop a stroker kit in that if yours is indeed junk. If you search the Hot Rod magazine archives, someone built just such an engine and got hemi style horsepower out of it. Would be hard to beat as a conversation piece.
Dave