You could make that luger look great again! First, do not gold plate it!
There are 1001 options. You could sand it by hand, carefully trying to keep the edges sharp. Then try your hand at rust bluing. I would recommend the Pilkington's rust blue product, but any rust blue formula would probably look good. Another option that I have done is to hand sand it, then sandblast, then parkerize it and then gunkote it. You could skip the sandblasting and parkerizing. Lastly, you could send it out to someone to refinish, but where's the fun in that? You could leave it as is, but life is too short to shoot an ugly gun. Good luck.