Some folks would glass bead that Luger to help camouflage the pitting, and then blue it. That will work and produce a matte blue finish. It is likely the easiest way to prep the metal for refinishing.
If it were mine, I would spend the time with Emory paper/wet-dry paper/etc. to try and get as much pitting out, or swallowed, as possible. I would not try for a polished finish as it will show any remaining pits quickly. Perhaps a 220 grit paper finish or there about could do a nice job for you. Sort of a trial and error. I would blue it, and not "coat it". You can produce a very acceptable shooter Luger from what you have there.
Having the Luger function reliably is a huge plus, in my way of thinking. The rest is window dressing......and the fun part(at least to me). Good luck!!
EDIT:
David posted while I was typing. I am a slow typist!!
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