I have a cat 3126. This rust doesn’t look too bad to me...
Look up adept ape channel on YouTube for a good breakdown of CAT motors. There are some things that make the 3126 more desirable than the C7, but there are people out there getting good service from them.
Worst rust is on the exhaust manifold and nothing to worry about, they are a cast iron and have no coating due to the high temps they see. Nothing else I see is a concern either.