I know its only a wall hanger but it might be useful to stop the rust getting worse.

You could "spool" out the barrel. Get a length of aliminum rod, or something similar, (I use an aluminium tube with a slot cut in the end), and tape a piece of emery paper to it and push it into the barrel. Put the rod in the chuck of an electric drill and set it going. If you go up and down the inside of the barrel it will remove a lot of the rust.
You coud then treat it with something like Jenolite to kill what rust is left.

If you need hammers try going to an Arm Fair. They have all sorts of bits and bobs that you might find useful.