BWM

Not all marine plywood is equal, and there is a wide range of specifications. The type I used to clad my back cabin had .ore in common with balsa wood than most available. I don't think that the plywood shown is too bad, and if you lift the carpet, you may find that it looks much the same. A quick rub down and some varnish or coating of your choice should suffice. The existing plywood is almost certainly of a better quality than that currently available anyway.

The surveyors report appears to favour the seller in my opinion and has undersold the pitting. Would be far better to spend a similar sum on a boat with a pristine hull and some decorative/interior issues.

Even more so if any over plating is required as it may remove the need for ballast.

If you're stripping it out, have a look under the current flooring. Many older boats have untidy ballast, raising the floor beyond the necessary minimum and would be a much easier way to increase headroom by dropping the floor.

I've seen at least one that was cut in two to load and ship it to a builder, a 72 ft butty that had spent so long there that buildings prevented it from leaving.

Two things that may become a problem. The first being the seal likely to fail if installed like that and this will allow black goo to leak down the flue inside the boat - this smells nasty too. The second is that it may prevent a liner/twin wall chimney from being fitted, due to the angle.