It will blend for sure, but the real question is if it will work. Of course I can power it up right now, but because of the rust I am afraid that this approach will cause some serious damage to the logic board. I'd like to disassemble the computer and inspect power supply first.
Macintosh LC like computers are really easy to disassemble. Actually you don't need any tool to do this. Every part of the computer is holded by plastic latches that are part of the bottom case. Disassembling process is very intuitive and the only thing you should pay an attention to are plastic latches that can be broken easily. If you would like to see the whole process step by step, watch Apple Macintosh LC II (1992) Full Tour and Disassembly.
The housing of the power supply is a bit rusty, but it seems that it's not a real issue because it's only on the surface (no deep corrosion).
I have disassembled the power supply and cleaned it. The PCB looks fine, without any sign of corrosion, but I've inspected it with the multimeter, just to be sure..
I've assembled everything together and now it's a moment of truth. I've turned on the power supply... no smoke, great!... and checked the output voltages (+5V, +12V and -5V). Everything looks good.
Now I can invest more time in this project... and more money... obviously.