I really don't know how to advise you -- but offer a couple of things to consider.
Is this a skeg hung rudder or a spade? Is the rudder stock solid bar or tube? If answers are spade and tube I'd be more concerned as the stresses would be greater on a spade and the tube weaker than an SS bar. Also, the severity and location of the corrosion would be important considerations. Rust on the quadrant, per se, may not be a big deal, but the rudder stock could be. Why don't you ask a yard what it would cost to rebuild the system?
I did a quick check on Contest 31s now on the market and they range from $45,000 (1982 in CT) to $4750 (1974 in SC). That's quite a range and may be either due to great differences in upkeep / condition, but also might be due to design and construction changes. I noticed that some of the 31's have skeg hung rudders and some have spades, so there obviously have been design changes over the years. You might want to investigate the design's history and manufacturer's reputation before deciding.
Rudder stock should not be 304 and 316 type stainless can suffer from crevice corrosion and is somewhat weak. A better choice would be Aquamet, Aqualoy or any of the other brand names in this class such as Nitronic 50. Nitronic 50 and it's counterparts are much less susceptible to crevice corrosion and are significantly stronger than 304 or 316 stainless. Unfortunately many builders have used 304 or 316 for rudder stock over the years and this may be one.
It's hard to say how much the repair will be and if the rest of the boat checks out it may still be worth it. If the rest of the boat needs work like rigging, decks, blisters, antique engine etc. etc. its a walk away..