Here's my take on it:
1. Since the bayonet lugs have been chopped can I fix it, since I live in a non-commie state? Or does it have to live that way forever cause that's the way it was "ATF'd" into the country?
Like Larry says, local laws can make a difference so check there first.
On the federal level, you're 100% in the clear because it's an SKS and suitable for sporting purposes. If it was determined to be unsuitable, you could then look at 27 CFR § 478.39:
Assembly of semiautomatic rifles or shotguns.
(a) No person shall assemble a semiautomatic rifle or any shotgun using more than 10 of the imported parts listed in paragraph (c) of this section if the assembled firearm is prohibited from importation under section 925(d)(3) as not being particularly suitable for or readily adaptable to sporting purposes.
(b) The provisions of this section shall not apply to:
(1) The assembly of such rifle or shotgun for sale or distribution by a licensed manufacturer to the United States or any department or agency thereof or to any State or any department, agency, or political subdivision thereof; or
(2) The assembly of such rifle or shotgun for the purposes of testing or experimentation authorized by the Director under the provisions of § 478.151; or
(3) The repair of any rifle or shotgun which had been imported into or assembled in the United States prior to November 30, 1990, or the replacement of any part of such firearm.
And realize that #1 you can replace any part on any rifle imported prior to 9/30/90 as you please and/or #2 even if the gun was imported after that date (as almost all of the neutered guns were...because the AWB was the impetus to neutering them and gaining 'sporting' status to allow them to be imported anyhow), the FSB is not a counted part and doesn't fall under 922(r) anyhow. It would be like replacing the sling.
On a side note, I always find it very humorous how fixated the firearms community is on being 922(r) compliant and up to date on all the intricacies of the law. BATF simply doesn't care, many of the field officers would give you a blank stare if you tried to get information as to whether XYZ gun in ABC configuration was compliant or not. It is simply not something they actively look for, in fact to my knowledge, 922(r) has never been used as the sole basis for prosecution or confiscation. Adding to that, I don't think the word 'assemble' has been clearly defined in the CFR either. Does assemble mean built for the first time from discreet parts, does it mean taking one part off and reinstalling that same part back back on at a later time, does it mean taking a part off and swaping it with a different/new one? Is it all parts on the gun or just counted parts? Nebulous definitions like this are impossible to nail down without the courts getting involved to determine the intent of the legislative branch in crafting the law...
Finally, assembly is not the same as possession. While this was not necessarily true in the AWB era, it is most certainly true now that 922(r) prohibits the assembly of certain things, but does not prohibit the possession of those same things. The burden of proof would be on the prosecutor showing that John Doe "assembled" the item in question, not that he "possesses" the item in question.
2. Since the bayonet lugs have been chopped can I use a C&R to buy a specimen such as Weldrdave's or has that kite flown since not original anymore?
This is a gray area. BATF would have to issue a ruling based on a submitted request for determination. They have issued rulings in the past that changing out a stock from wood to plastic voids the C&R status until the stock is reverted yet they have also issued rulings that the temporary removal a bayonet for shooting or display purposes does not void it, so it honestly could go either way. I would guess that since this is a 'permanent' change to the firearm, it would void the C&R status just like cutting a barrel down to 16" would....