By the time you have paid for a bit more welding and the cost of an MOT at an alternate garage that will be close on £100. I would hold out / save for the subframe replacement.
Example on evil bay at moment
http://www.ebay.co.uk/itm/Subaru-impreza-WRX-STI-newage-bug-blob-howk-c-subframe/252332212172?_trksid=p2045573.c100034.m2102&_trkparms=aid%3D222007%26algo%3DSIC.MBE%26ao%3D1%26asc%3D35951%26meid%3Dc91fb77fc9a348289fc24b785dd2860a%26pid%3D100034%26rk%3D4%26rkt%3D4%26sd%3D181995533674
A wire brush and some smoothrite before fitting should keep the rust away for a bit
Plug gap is important but as you have a flat spot not lumpy running I would have thought it was more a air / fuelling issue. Has the flat spot appeared recently?
depends on engine spec as costs will vary based on that, closed deck block, fully forged internals, stroker kit etc. As mentioned Savage has a great build thread for his classic - step by step could you rebuild your own unit?
the problem is the oil stays in the heads under extended track conditions / heavy cornering etc baffles reduce this to a degree but a smaller sump without a baffle will not.
a baffle is one way - most cost effective or a dry sump is a more effective (and expensive) way of addressing oil starvation