Yeah, that looks marginally worse than the one I rescued. If you do nothing, you'll get excessive backlash and/or 'notchiness' depending on how you preload the box up with the steel shims when reassembling. Not nice given how good the steering is on these cars when they're set up right. My guess is a combination of incorrect preload, lack of lubrication, poor surface treatment when new, and a hard life lead to this.
To repair the shaft you need a fairly specialised bit of kit - basically a lathe with a separately-powered counter-rotating grinding stone mounted where your tool would usually go on the lathe. You then need to dress the stone to give you a radius approximately equal to that on the face that is pitted (exact radius shouldn't be too critical, just based on the way it works) and then re-grind the face just enough to return it to an un-pitted condition.
I wouldn't like to speculate on what (if any) surface treatment (hardening) was applied when new (although I vaguely remember it looking like it had been heat treated from marks on the steel?) but you might have ground through the hardened layer. Ideally you would re-harden before reassembly. You could test a non-critical part with a small file to get a feel for how hard the resulting surface is.
If you can get the whole job done cheaper than getting a new one, then it might be worth it, but if there are spares available it's a lot of effort! I was a student at the time, and had access to the machine shop...
Hope this helps, and if you have any other questions just drop me a PM.