Be honest and show them/ tell about the rust. Don't try to hide it, that's the most unethical thing that you could do. State in the ad it's either for sale whole for someone else to part out, or drive at your own risk. That's what I'd do. 

To me, this question has a relatively simple answer: Full disclosure of the condition of the frame. Tell the truth. That's the ethical thing to do. (And, in any sales contract, have the buyer acknowledge the condition of the frame, after you've fully informed them [even with photos] of this).  

You could sell it for "parts only," as well, again revealing the condition of the frame. But again, have documentation of the condition of the vehicle, and acknowledgement of said condition, by the buyer, to protect you against any future liability claims.

So, it's not just a question of ethics. It's also a question of protecting yourself from potential future civil lawsuits. 

Have the vehicle condemned by your insurance adjuster. The title will then read "Salvage". You might even be able to do it yourself depending on your state.  I had a Dodge Aspen that rotted to the point the frame separated from the car. My insurance company totaled the car. They did all the paper work. They then said your free to do with the car what you want. I called a junk yard and had it hauled away. I received a salvage title from New York a couple of weeks later which I gave to the junkyard. The title says "Unrepairable". They can't turn around and then register the car.

I am surprise at Toyota. They were buying back rotted trucks a couple of years ago as a result of a class action.

Full disclosure, full disclosure, full disclosure. 

There is a market for parts cars, and this may fit the bill. 

A dealership might take it as a trade in to make a sale even with the rust. I don't think that's at all unethical. They're big boys and know what they're doing.

Thanks for your comment about your 2005 Tacoma. I am glad Toyota did the right thing and replaced its frame. I definitely understand your stance on not buying another one based on your experience. For reference, I have included a screenshot of the email response I received from Toyota USA's HQ in which they decline to replace my 1999 Tacoma's frame. I lost a lot of respect for them based on their unwillingness to help resolve this known quality issue with their frames. Thanks again for taking the time to comment.

Thank you to everyone that responded! I truly appreciate your honesty and insight. I reached out to Toyota USA and issued two complaints directly with them about the rusted frame. They told me that the window for replacing the frame was closed and they no longer do this. I even complained to the Better Business Bureau in the locality where Toyota USA is headquartered in Texas. However, this too only resulted in Toyota just telling me the same thing. I honestly tried to get Toyota to do the right thing.

I have a 2005 Tacoma and was lucky enough to  get the frame replaced but only due to a class action law suit

These rusted  frame issues creating dangerous unsafe   vehicles is an absolute disgrace by Toyota.  I have a friend who has an older large Lexus  SUV and the Lexus dealer declared the truck "unsafe to drive" because of the rusted frame

I dont think I will ever buy another Toyota truck ever again after this experience.  It does not matter how good the motor and transmission are if the entire vehicle  is on the verge of structural collapse