A little surface rust--I would not be concerned about it. I would highly suggest changing out the cam. If you don't know the specs, you are really in the dark about your engine. It could be an old style cam where as one of the newer designs will give you a better overall power curve. Bigger is not necessarily better in most cases. As far as 1.6 rockers arms, I am not a fan so I am biased regarding their use. The power increase with 1.6 rockers is marginal, and you will have to make sure that your valve springs will support the increased lift and not put you into coil bind. More trouble than they are worth in my opinion.