The part that is water damaged appears to be made of a different fabric,maybe cotton? If it is, can that part just be removed and not used?
As for the other, the silks are beautiful and look very fragile, so I think I would reinforce by hand the parts I could and then I would use an interfacing on the fabric before I cut it to make the quilt. It looks like it would make a beautiful crazy quilt, but I sure wouldn't give it to a child!!