I would agtree that water as the cooling agent would eventually cause problems- such as rust. But rust would form in the engine, not the radiator- the rad is aluminum. A good flush of the cooling system is in order I think.

As far as the engine pressure, if there's no vent, you may have to install one in the valve cover. ( I have done this on a few occasions).

I would suggest taking oil pressure readings & compression readings & checking them against spec. This pressuration issue could be a symptom of a worn out engine.