I heard that sometimes if the rust is bad enough and it builds up over a long period of time it could ruin the lower end of the engine... don't quote me on it but it sounds legit ;p
I'd flush it ASAP, or atleast drain the radiator and put some fresh coolant in there.
Also if the total repairs for the "engine" are more then $1500, you may want to look into a 7MGTE complete engine from suprastore for $1500
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