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Surface rust can be removed with 0000 steel wool, or naval jelly (if you can find it). You might want to touch it up with cold blue afterwards.
Yes, you can shoot 2 3/4" shells in a 3" chambered gun. One word of caution, though, those H&R and NEA singleshots sometimes wear a bit, and the action does not always remain securely closed. If in doubt, you may want to have a gunsmith check it out.
Good luck,
Bud
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