The main deciding factor is the condition of the nose, which is the area where the rear main oil seal rides.  The rest can be glass-beaded to bare steel (masking off the oil seal area to keep it mirror-smooth!), then put on a flywheel grinding machine.
  They'll be resurfacing the clutch disc surface and then they need to take a corresponding amount off of the step surface where the pressure plate bolts on.  This second step is important to keep the stock clearances for proper adjustment and to get full life of the disk.  Without that, it's like starting out new with a thinner, worn disk, and it'll start slipping sooner.
  Some machinists will also take cut off the sides of the starter teeth to renew the chipped teeth to square edges.  

Mike B.
  ----- Original Message ----- 
  From: Jack R. 
  To: vanagon@GERRY.VANAGON.COM 
  Sent: Friday, May 08, 2009 5:06 PM
  Subject: Re: rusty flywheel

  Ben,

  Provided the rust isn't too deep, and that you haven't resurfaced before...
  I don't see why not.
  The machine shop will be able to access the damage, and make a good
  recommendation.

  Jack R.

  -----Original Message-----
  From: Vanagon Mailing List [mailto:vanagon@gerry.vanagon.com] On Behalf Of
  Ben S
  Sent: Friday, May 08, 2009 3:50 PM
  To: vanagon@GERRY.VANAGON.COM
  Subject: rusty flywheel

  the 2.1L wbx engine that i'm about to install in my westy sat for a
  few years and the flywheel got pretty rusty.  is there any reason i
  can't just have it resurfaced at a machine shop and then drop it in?
  end play is in spec.

  photo at:
  http://www.flickr.com/photos/bs_pix/3512545587/