Chuck, If it shoots with-in 4" at 100 yd. you most likely won't do any better with a new barrel. The Ruger mini 14's are not known for accuracy. There are things you can do to them that helps, but they are at best plinkers. Like Randy said, They have skinny barrels that heat up fast. On most about 3 shots is all you can get before they wander from the heat and from vibrations often caused by the op rod striking the gas block along with an ill fitting stock.
With the barrel rust I would try a bore brush wrapped in 00 steel wool, apply kroil and brush 20 strokes. That should help if not deep pits. I would not do that in a good barrel but, then you are trying to salvage this one. If that looks like it helps, then a little JB paste will polish the bore some more.
If the bore cleans up decent, the cheapest thing to play with on accuracy is one of those Limb Saver barrel dampers. Start with it about 1"-1.5" off the gas block, shoot, move toward the ft. sight about 1/2", shoot, move some more, repeat till you reach the ft. sight. Some where along the way it should help with the group size. Remember to not let the barrel get hot and if you get 4" or under, you've got a good one. I hate to paint them badly, they are reliable, and fun if accuracy doesn't count. LOL
Bobby
ps I just caught your use for home defense. They are reliable, so that should be a good use.