There is a state inspection to make sure the car is road worthy. Mainly checking the lights and junk like that. They don't check the car for much of anything really. Pretty much if the car is within the uniform vehicle code specs they can't fail it. The car doesn't have to be anything resembling stock though
There are no emissions tests or any actual tests for a car unless you are trying to license a salvage title. Those have to be inspected a bit more carefully. If you have a picture of the damaged area they usually just look at it to make sure it was actually fixed then give you a clear title for it.
Really the car isn't as rusted out as my xfi. I have more or less found every bit of rust on this thing and it is in the pictures. I bet when the xfi shell is down to the bare metal it looks way worse. I think they made these cars with super cheap metal. I have cars that have been sitting outside unprotected for 20 years that have less rust on them than these cars all seem to get.
The good thing about the vert is the frame is still square and the suspension points are all in the right place so I don't have to try and re square the car. I should be able to have it sitting on it's new chassis in a few weeks if I can get the tubing in quickly and school stays easy.