A couple things concern me here:
1) Is that surface rust or anything deeper. Dealing with a trailer like that, I found out a front spring mount was rusted through at the frame mount... I found out in the middle of no-where (figured out it was a pot-hole that was the final straw)!
2) The frame looks like angle iron (1" X 1"), I would NOT say that is strong enough for any trailer that will see more than well-graded fire roads or pavement.
3) What are you planning for wheels/tires? That looks like a pretty lightweight axle/wheel combo.
With these considerations, I would start from scratch. The biggest cost in my current build is the frame, but I'm starting with a very stout one. Re-building or modifying an existing trailer was a thought at first (I even had an off road trailer I could modify) but I realized, to do it right it was worth the extra time and money to build it right the first time. See my signature link for more on my design and (just starting) build.