[Accelo]

I'm looking for a cost effective/easy solution to mate my SM465 to 12-bolt axle.

I swapped in a 350cuin/sm465 in my '67 C-10 which had a 6 cylinder SM418. Obviously the driveshafts don't match. The 350/SM465 came out of 72 C-20 with Dana 60 axle. The 72 driveshaft has a much larger diameter and different mounting arrangement than the 67 (see photos). As I see it the options I have are as follows:

1) Custom driveshaft. My concern here is can the 12-bolt handle the added torque (about 400ft/lbs)?
Doubt you will any issues with the torque. Running 12-inch wide tires and driving like you are 16 it's possible to mess up anything. Reasonable anything and it will work.

2) Swap out the axle with one that is compatible with the Dana 60/SM465 configuration (did chevy make this?). I would use the axle from the '72 but it is a leaf spring suspension (my 67 is trailing arms) and it has 8 lug bolt axles. Also not sure if the axle length is compatible with my '67 configuration.
Way too much work and their are easier solutions.

3) Put in a different 4/5 speed transmission that I can use with my current axle.
Again way too much cost and work and their are easier solutions.

Bonus question, if I can use my current 12-bolt axle can I make it a posi? I believe that there is a difference between a passenger car 12-bolt vs a truck.
Yes you can make it a Posi. If you don't change the gear ratio it's not a bad job. Yes the car and truck twelve bolts are not the same.

Lastly, there is rust and pitting on the shafts
Same as answer #1. (Doubt you will any issues with the torque. Running 12-inch wide tires and driving like you are 16 it's possible to mess up anything. Reasonable anything and it will work.) Lots of cleaning will likely tell you it's just pitting? Best guess using pictures and some experience.
Cheers