Grant,
The brown grainy stuff is a coating of some kind. You can see the glue on the far end of the ceramic that it was glued on with.
The contacts are copper so the brown on them is not rust. And of course the blue corrosion on the buttons is not found on steel either.
Clean the buttons and the under side of the swing arm, and adjust it for good contact. Then rewire it and you should be good to go.
I love old foot controllers like that. I do all I can to refurb them back to useable condition.
Joe