If I inherited a knife and knew that it had an interesting history, like if a family member had carried/used it during a war, or if it were used during camping/hunting/fishing trips between my dad and his dad, then I would be inclined to leave it alone.
But if the knife was just used in the garden to pry up weeds, or similar mundane tasks with no sentimental attachment, then I might be inclined to restore the knife.
If I had that knife, and if I had made up my mind to restore it, I would clean and lightly sand the blade until the scratches were gone and I had a satin finish (starting at around 320 grit, then using finer and finer grits until I was happy with the finish). Then if I wanted, I could always polish the blade.
If the tip of the blade is rounded, I would re-profile it.
As for the loose guard, I would remove the pommel pin and add another washer.
Another option for tightening the guard, without removing the pommel, is to shim the handle with a piece of aluminum or stainless steel cut in the shape of one of the handle washers, with one end open, and then pushed/hammered between two of the handle washers. What metal I used would depend on how thick/thin the shim needed to be. If for example there was only a hairs-width of space causing the looseness, then I would use a very thin piece of stainless steel. Small gap, thin shim=stainless, big gap, thick shim=aluminum.
But that's what I would do. And the bottom line here is- it's YOUR knife, so you can do whatever you want with it. You don't need anyone's permission or approval to do whatever you want with YOUR knife.