It won't fail - there is virtually no stress on it. Also, carbon doesn't rust, iron does. The problem is that sugaring causes iron to precipitate to the surface (I think that's the right terminology), and surface rust will occur. However, it really isn't that big of a problem. The boil will take care of any nasties that find their way into the cracks. The acid etch is a great idea, as is a good scrub with a stainless brush if any corrosion does occur.
Next time, have your buddy back gas the weld. He put a decent, even bead down, and there was obviously some penetration. Flooding the back of the weld with argon would likely have gotten you pretty decent results.