Yes, that's not red rot; that's chrome plating wear. It's not good, but it's entirely possible to work with if the tubes are straight and parallel.
You can polish it up with a good brass polish and then put a little slide cream over the wear. Should work fine.
I wouldn't spend a lot of money on this - I would just use Trombotine, keep it really clean and play it for what it's good for, while I save for a double valve bass that I can take into any situation. I wouldn't sell it though...an excellent single valve bass is very useful to have in your arsenal.