Thats not so bad for 20 bucks. Those rust spots by the welds that hold the support straps of the charcoal grate are typical of very high heat against the bowl. I've seen it happen numerous times when people bank their coals right against those weld spots that support the straps in the bowl.
You can certainly drill a hole in the handle to make it a one hole handle...but why? Just drill out the original 2 rivets and get a new handle from Brian. It will look awesome!
As far as the rust spots, sand them down with a dremel wire brush attachment, coat them with 1500 bbq black paint, and see if you can find a high heat touch up for it.
Either way, once you get it cleaned up, put a new handle on, straighten out the ash catcher a bit...this will be one fine looking grill!
You did well for 20 bucks. All the parts are there!
Oh check that. I see the leg sockets with the new pics you posted. That might be a problem. I think Shaun has some experience with something like this...I'll let him chime in.