No, there probably is no need to replace that keel. Generally keels can be refurbished and brough back to "like new" condition.
What you should probably check out and maybe replace is th pivot pin, the cable, and the point on the keel where the cable attached. in order to properly instpect the pivot pin, you need to remove the keel and remove the pivot pin. Since your doing that, go ahead and replace everything.
Refinishing the keel can be a job. Sometimes they don't need much more than paint but if it's rusted bad, you may need to clean it up good and repaint it or cover it with fiberglass.
There are some useful links at my website, Sailing and Such. Go to the Sailboat Projects section then to Restorations. Check out the Catalina 22, and the Venture 24, they both have detailed information about removing and restoring a swing keel simular to yours.
Hope it helps and good luck!
Small is beautiful, simple, cheap, and easy......
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