It's aluminum, so I have no idea why the rust is that colour. Are you sure it's not stains and crud from something left in it? Something made of stel, perhaps?
I would *think* that a good scrub with steel wool or some other abrasive materail should get it off and then boiling water in it would build up the passive layer you want on aluminum.
I would say it's definitely big enough to use as a kettle, but not a MT.
And yeah, the hole at the bottom would be perfect for a ball valve.