Seized and shredded bottom bracket

I applied it first to forks and main tubes with a brush, covered in cling film and then came back 30 minutes later to try and rub/sand off. Not much joy, got about 2% of the paint off. So I thought I'd try sanding. This revealed the original decals in a cool blue sparkle colour.

Unfortunately it also revealed a crack. I thought this was just surface rust originally when I bought the bike. But it goes right through the chainstay. It's about 10mm long.

Toothbrush bristles go through it, so it's definitely cracked the whole way through the tube. It's the location where the tyre on the old build must have rubbed, to removing paint and exposing wearing down the steel. Then I guess time and oxygen did the rest.

Anyone here know if this is repairable? I've never really seen spot repairs on tubes so I suppose it would need a new chainstay. Is that likely to be £££?
Edit: Looks like Winston Vaz charges £100 to fit a 631 chainstay. Not horrific, but not peanuts either.

Crazy off-piste idea: I could strip paint, lightly sand that section of chainstay and then wrap with a ribbon of carbon weave soaked in epoxy. I've repaired carbon frames that way. Is that a stupid idea on steel?

I've also asked on Current Projects chat and miscellany.