Welcome to the forum Pit_Snipe. Your luger probably woudnt be insured past $1000.00.
You could have it restored but since its chromed (fairly poor condition cosmetically) it might affect tolerances of some moving parts if you remove the chrome by buffing it off to allow a new blueing.
A competent restoration by the luger doc or Thor ( more notably for that department I think) on our forum would be a great way to get that famiy heirloom lookin spiffy . Neat story by the way.
as far as shooting the pictures look good ( head space and stuff) as long as you know the caliber of ammo it uses and it feels good mechanically I would shoot it. Im no expert or a gunsmith and pictures arent the same as holding the gun so a gunsmith evaluation woudnt be out of line. You could also have the gun rebarreled. Hope this helped
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