what are those earth readings? have they actually tested anything?
and if they are being reduced then that is a good thing as the readings should be as low as possible. poor connections would increase the readings!
"rusted slightly" sounds to me like a bit of paint is required, not a rewire, but again I haven't actually seen it to know for sure.
if it is very rusty then the conduit may need to be replaced regardless of how the earthing is done as it would no longer be providing adequate protection to the cables.
no, it doesn't become a new installation, changing a CU is an alteration to an existing installation.
so what if it is an old way of doing things? just because it is old it doesn't mean it cant be done now nor kept in service. Granted most of us wouldn't use steel conduit as the earth for circuits these days for new work but that doesn't mean you can't maintain an existing installation.
I look after a few installations where old conduit and trunking has been installed in this way and normally the only issues i have with earthing is fixing what some cowboys have done to modify the installations over the years
I think your electrician is confused.