Quick cut to the finish - once I put a new handle on the hammer and removed some of the rust off the head, I found myself much more inclined to use it - apparently we like to work with attractive tools. And even if a thing is easy to do, it's more likely to get done if we have a precedent. So, all you beat up hammer users out there - renovate!
Step 1: Tools Needed
1) A new handle and wedges - available as a kit at your hardware store. If in doubt, bring the hammer with you to the store to make sure you buy the right size replacement handle. A friend has pointed out that a replacement handle may cost almost as much as a new hammer. Perhaps you might want to whittle your own handle.
2) A hacksaw for sawing off the old handle
3) A hammer and punch to drive out the old handle.
Step 2: Saw Off the Old Handle
Also note the use of the hack saw. At some point in its life, the owner, probably someone other than you may have pounded nails into the end of the handle and you don't want to run into one of those with a wood saw. Ruins the teeth.
Step 3: Remove the Stub From the Head
Now that you have a rusty hammer head without a handle, you may also wish to polish up the head a bit on a grinder or with some sand paper or a file. This will make it more shiny and attractive to use.
Step 4: Install New Handle
Step 5: Install Wooden Wedge
You may need to whittle down the sides of the wooden wedge to match the width of the slot in the hammer head.
Once you have a good fit, pound the wooden wedge as deep as it will go.
Then trim off the wedge with your hack saw.
Step 6: Pound in the Metal Wedge
File or grind off anything protruding out the end of the head to give it a nice smooth finish.
Step 7: You're Done
Enjoy the renewed addition to your tool box.
If you're feeling empowered by this exercise, renovate something else, like maybe a screw driver.