Can this frame be repaired for motorized bicycle use?

I picked up a really cheap Schwinn Heavy Duty crusier frame at a swap meet and thought I was lucky. As I was stripping parts off to refinish the frame, I found some damage to the dropouts under the kickstand. This is what is looks like after stripping off the finish. Sorry for the poor quality of the cell-phone photo.

The hole is a puncture, not corrosion. I'm thinking I can weld the hole shut and maybe fill in the dents too, then just grind the fill down to keep things pretty.

Should I try fix it, or should I scrap it and find a different frame?

Re: Can this frame be repaired for MB use?

Thanks guys. I'm building it for me, not for resale. Competent may be a stretch, but I had a little training in gas welding about a year ago. The picture is my last sample piece from that class... Not perfect, but not awful either.

I'd never use JB weld on something like this... It's non-structural only. About as useful as bondo, but easier to mix in small quantities.

I've got torches and equipment for gas welding at home but no bottles. In January I'll get some and take a crack at welding this frame, but until then I'm going to shelve this project and focus on my wife's Monark. Between now and when I get back on this project, I'll be on the lookout for another frame.