It actually has the potential to damage the stator when all those rust particles are circulated inside the two pieces held in place with the magnetic field. It isn't worth taking a chance when the rotor and stator housing are showing lots of loose rust build up. The rust products cost in the low $20.00 range for 3.8 L and can be used many times before they are no longer effective.Rust really doesn't have anything to do with the performance of these parts.
They either rotate and the Magnetic field induces current into the windings or not.
The issues that come into play here are:
Are any of the windings shorted ?
Have the magnets lost any of their field potential over time ?
Are the Output Connections clean and making good contact?
Is the Regulator/Rectifier healthy?