If it were mine - and I have a few that are in about that condition - I would leave it as is. Appreciate it as an artifact that shows considerable use for the purpose for which it was made. If you grind away a significant portion of the blade to remove the damaged area, all that history is reduced to metal shavings. If you need a kukri to use, buy a new one and promote the preservation of an ancient craft in a very poor country. There is nothing about the condition of that "old warhorse" (to adopt Spiral's eloquent description) that a collector should be ashamed of or apologize for.
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