yup, this is classic restore/reconstruction and a toughy at that. i'll give anyone that wants it a heads-up here. some areas are completely missing in all that dark. try what you want but you're not going to find all the detail you want. it's just plain not there. add in over-exposure and under-exposure and a liberal sprinkling of spots, 'fog' and other unwanteds and you're in for a time.
i'd highly recommend spending a fair amount of time on light balancing before almost anything else. get all the detail you can to show up and balance things out before the other cleanups.
and the other big issue is going to be reconstruction. bringing back detail that no longer is there takes some good detective work and a good hand and a good technique. careful with the clone and smudge, especially on the faces. that's a critical area and one where judging is probably going to be mostly centered. dress/clothing will probably be the next most important followed by the background.
with all the damage in other areas, it's surprising at how much detail does exist in some of the clothing. so, careful with the cloning/repair here too. lose the detail, lose points.
if you feel compelled to use filters, especially ones like neat image, polaroid dust and scratch and similar 'cleanup' filters, dont overdo it. these have a tendency to blur areas and it shows.
and bear in mind the rules state this is restore, not a painting. the idea isnt to 'make it pretty' or to make it art; the idea is to bring it back to its original state or to photo quality.
there's also been a minor debate in the past about sepia tone as opposed to true black and white. to me, this is a very minor issue and more a matter of preference. if you can restore the quality then any toning is more something one discusses with a client. however, i'm sure there are those that think it shld be one or the other, especially if the image depicts that this is the way the original would have been or 'what would have existed at the time it was taken'. so, use your own judgement on that one.
and as always, do not have any fun. work, work, work! and frown often
craig