I thinks it's repairable, I had one to restore that was about as rough but the lady loved it and had purchased it for $40.00 at the local Goodwill... I would start by seeing what could actually be saved, as in removing all finish everywhere. You may be able to remove the entire block and glue it back together then use an inside bolt or as you said a dowel but I don't like those as much. Without actually seeing it I can't say for sure but you can send some photos to my email after you get all the finish off... so maybe a closer look? Keep in my the goal (in my opinion) is not to try and make it completely like new, but to preserve all you can of the original and at the same time make it playable, bringing back to life, so to speak.
Good luck with it, looks like fun to me! And an interesting instrument!
"Lean your body forward slightly to support the guitar against your chest, for the poetry of the music should resound in your heart." Segovia