The acidic water is what is causing the casing to deteriorate, not the rust build up from the iron content.
The driller should be able to use a well cleaning brush to clean the rust off the inside of the casing. And IMO he should have done that as soon as he started the camera inspection and saw the rust build up; cameras don't see through rust.
A PVC liner is usually 4" and allows just enough space for a standard 4" submersible pump by about a 16th inch around the pump; they are 3 7/8" OD. With your iron content rust build up in the PVC may make pulling the pump difficult in time.
That 5 gpm you mentioned is the volume of water that refills the well while or after you pump water out of it. For the static water level to fall, you have to be taking more than 5 gpm out.
A 6" casing/well holds 1.47 gal per foot of water above the inlet of the pump. A 1/2 HP 10-13 gpm pump set at 150' and operated at 40/60 psi would provide more than enough gpm to backwash most types of the filters you need. A larger HP 10-13 gpm pump could be set much deeper.
I would suggest a backwashed mixed bed acid neutralizing filter over any type solution feeder and its required retention tank. An AN filter will add about 10+ gpg of hardness. And then you'll probably want a softener.
The model number of your pump will tell us what HP and gpm it is. Some times that info is written on the underside of the well casing cap, or on a pump control box if you have one, or on the pressure tank. And there's always the receipt for the pump installation.