Lots of bondo (or your wood filler of choice), a lot of sanding, and a lot of time.
You're going to strip the cabinet down to bare wood, remove any loose chunks, fill with bondo, sand smooth, prime, paint, and apply decals. It's going to be messy, and requires a lot of time and space to do properly. Down the road, you will probably never get out what you put in in terms of money and time.
My opinion is you really don't play the cabinet... my gameroom isn't a showroom or a museum, it's a place to play a few pins. My enjoyment of a pin comes out of how good the gameplay is, so I'll definitely go all out on the playfield. I could care less about the cabinet unless it's filling a simple small gouge or something.