>>2024672cromo rigid mtb is worth it, yes, and i quite like that style of cable routing. It's a decent frame, although the colour is hideous and the components are quite heavy.
Actually I would try to service the hubs first and gauge their condition. If the hubs are worn out then maybe it's not worth it. The bike can be made to work better but it's never going to roll smoothly or be particuraly efficient. You'd be looking for new wheels and sourcing decent 26" wheels will push your budget past the point where you should probably get something nicer.
Considering this is a complete basket case and you're gonna spend ~$200 on it, you might find something much nicer to start with for ~$100, and my preference would be a similiar era road bike. It depends on if you like cruising or you want to go fast.
for parts:
11-28 shimano or 12-32 sram cassette depending on if you imagine riding it fast on the flat or not (~$20)
Sram 850 / 870 or KMC X8 Chain (for 7 speed) (~$20)
UN55 if you can find it or UN300 bottom bracket (~$20)
kool stop eagle pads (~$20), or, just run those pads along a sandpaper block/ file to reveal fresh rubber
cables (~$20)
oury grips ~$20
chinese pedals, fooker, myzrh etc ~$20
$200 budget is easily doable.
I would also try find a nicer, longer, quill stem and some bars with a bit of sweep / rise. If you run bars with sweep you can get room to zip tie a small basket on them. Do this when you're re-cabling and it can all integrate together nicely. There are lots of different solutions for your cable stop, ideally, a stem with a stop/roller and you can delete the stop from your headset. Those canti brakes are quite nice and functionally identical to higher end ones. When you go to service them take them completely apart and clean everything. Do one set at a time so you have a reference on how they go back together, it's not that complicated though.
