With the amount of rust in there I think I'd pull it all apart and replace bearings and seals at a minimum. You may also want to replace the oil slinger gear as they are made of cheap pot metal and have a tendency to lose teeth pretty easily.
The trans is pretty easy to work on, you'll have to split the tractor after the torque tube (not to hard on these little guys) and remove the axle housing and such. Then you can work on it on a bench.