No Kikumon.
Yeah, I started looking at the forms for submitting it to shinsa, and wondered the same thing. What's the point if it will be immediately rejected for the poor condition and gimei?
Many times swords are submitted to shinsa in less than pristine condition. Generally, this is done with signed blades. The reasoning behind this is simple, if a signature is deemed shoshin(good), that helps one decide whether or not it is worth restoration costs, if it is deemed gimei, there may not much or any point in spending more on it. On the other hand if the shinsa teams says, it is gimei, but we think it is the work of highly rated smith X and if the current mei was removed, the sword polished then resubmitted it would most likely paper to X. Therefore, even though you didnt get your sword papered, you received valuable information which is beneficial in making future decisions regarding restoration. But note; a different shinsa team may not see it the same way. Keep in mind with ALL shinsa and ALL shinsa organizations, the attributions given are their best guesses, they are not guaranteed. Granted they are the best guesses you will get, but they can and do differ among teams and can change as new information becomes available. I have owned and know of many swords which have received papers to different sword smiths from different shinsa teams.
I'm getting the impression I need to bring it to a show in person and get some opinions on it, to see if it's worth restoring, and possibly have that done before formally submitting it for shinsa.
For the uninitiated, this can be a double edged sword. If you take it and start asking opinions, you will get a multitude of opinions and leave more confused that when you got there. At any given show there are no more than 1-3 people I would even consider showing it too for opinions. (Remember the old saying about opinions, they are like a$$holes, everyone has one and they all stink)
If you want to keep it, and the cost of restoration would cause you to have to sell it, then there isn't much point.
I'm still struggling with this. I may just have to hang onto it for a few years until I feel more comfortable in my financial situation. Then maybe I could justify spending the money to get it fixed up (again, if knowledgeable folks think there's a good chance it would be worth it).
Without looking at it in hand, I feel that it can be restored. Yet, keep in mind this is from a few less than optimal photos.There is no reason why you cant do it in stages. There will be another shinsa in Tampa 2/2016
I think the old habaki would still work, since the base of the blade is in pretty good shape, and the tang is thicker about an inch back from the machi anyway. In other words, if you made a habaki to fit the blade tighter, you wouldn't be able to slip it up over the thickest part of the tang.
It does look as thought he old habaki would work, it just looks nice when you have a new habaki with new polish and shirasaya. The thickness of the nakago is irrelevant, a new one can be made and will fit. They should not touch the sides, only the top and bottom of the nakago come in contact with the habaki, which is why it works.
It probably needs a shirasaya anyway, since the tsuka core is completely broken, and it does not have a saya to start with. It came stuck in an old gunto scabbard which does not fit properly, and damaged the mouth of the habaki a bit
Keep in mind that you never return a newly polished swor to an old saya. One grain of sand lodged inside can ruin your new and expensive polish.
This brings up another issue I'll have to ponder. I would prefer to have a sword that could be used, mounted in full koshirae (wouldn't we all? ). If I go that route, would it still be worthwhile to have a shirasaya made in addition to the koshirae, or just save the cost of the resting scabbard and go straight to full mounts?
Yes, a koshirae would be nice, but know this, it is much more expensive than shirasaya. If your budget was unlimited, then I would say if you want a koshirae, forget the shirasaya. I suspect however, once you begin pricing koshirae you will come to like shirasaya a lot more

Worst case scenario, you can get a shirasaya for now, then over the next few years put together some fittings, save some coin, and have a koshirae made(price them first).
As you are new to this, I do want to point out one other thing. Having a Japanese sword polished is always a gamble! There is always the chance of a large ware or fukure opening up during polish. These flaws can and do hide under the surface at times. They lie patiently until polishing removes enough steel to bring them out. Sometimes if small or if you have chosen a good polisher, they can be manipulated or repaired minimizing the obvious. Other times the polisher may recommend that polishing be stopped at that point. Regardless, they will affect the value.