Tom:
Your frame is roached in the condition it's in. Period. And should not be driven any further than from your driveway into your garage and parked.
In a 50-some-year-old car, it's not uncommon to see frames in this condition (or worse!). Lotus value-engineered these things; 16 ga sheet steel, bits from the common british parts bin where necessary, etc. I'm pretty sure NO ONE expected these things to be on the road half a century later. That's why replacements have become available. There is no nice or gentle way around the diagnosis, though, and without dropping the chassis, there is NO WAY to safely weld around fiberglass in those close quarters, or investigate other areas of dissolved iron, even if you wanted to repair what you have. If what you can see is that bad...pretty sure there are hidden areas that are even worse because of the inherent design.
In '07, I was faced with the same issue (some may remember back that far) due to bodged accident repair and a twisted front box. I got two streams of advice: one was to part out and start with another car, the other was exactly the same as here: drop the frame (my original shell was badly hacked too...so I needed to find a shell to go along with the chassis! Talk about starting from scratch!), get a replacement, swap the useable parts over from the bad to the good, drop the body back on, and go from there.
Started working on the latter in April of 2007. On August 18, 2007, a bunch of friends helped me drop the replacement shell on the rebuilt chassis. 3 days later, drove it around the block. It wasn't perfect, it needed an alignment, a head gasket replaced, and complete set of carpets and tires, but it ran.
Only you can decide which path, but, if you keep the car and you want to be safe, you're pulling the frame and either extensively repairing it or putting in either a restored OEM chassis or one of the replacements that are available. Of of the latter...thinking once all is said and done, you'd be better off swapping out than attempting repairs to the existing based on the photos you've sent. Just my $.02.