The severe pitting that is 'under the wood',,,on the sides of the grip straps and the sides of the frame that would be covered by the grips would most probably not completely come clean with a refinish. However, those areas would be again covered with a set of magna style grips so as not to show, but the rust could be stopped. Going way over the top,,the areas could be cleaned up with TIG, but unless this is really something special, I don't think that is probably an option here.
The rest of the revolver is actually not that bad and could be repolished w/o much problem and either reblued or nickled.
Again the question is wether the expense of the work is acceptable to you for what the gun is and will be when completed.
If it means alot to you from a personal stand point/family connection,,then it may well be worth it to you to restore it.
Others may see it as only spending money to refinish and never getting it back in a resale situation.
If you're just looking to clean it up for a shooter .38 to hang on to, then just de-rust it, clean and check the mechanics and go. As for an outside finish, a bead blast & hotblue will make it look pretty good w/o much expense. I'd probably just clean it up and keep it a well worn 'grey' gun' myself.