The oil level does not cover the gears. There is a plug behind the brake rod on the LH side of the transmission housing that is the oil level. Fill until it comes out at that opening. It takes 5 quarts of 80-90W oil. The gears and bearings are lubed as the gears sling the oil up and into channels in the housing. That oil runs down and lubes the bearings. If you are just using the tractor for show and don't plan on hard work, I'd just clean the gears up and rinse out the housing with solvent, put in new oil and you should be good to go. The gear teeth are rounded on the ends from the factory to make it so they will go into mesh easier when changing gears. Of course there is some wear, but your transmission looks normal except for the rust.
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Today's Featured Article - Identifying Tractor Noises - by Curtis Von Fange. Listening To Your Tractor : Part 3 - In this series we are continuing to learn the fine art of listening to our tractor in hopes of keeping it running longer. One particularly important facet is to hear and identify the particular noises that our
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