That's pretty bad fret wear there indeed. But, it's easily corrected, just install new ones. Every hard-working guitar needs new frets now and then - they just wear out in use, no way around that. But they should not be THAT worn even after a decade of regular use. Low grade metal.

When you put in new ones, use hardened frets. Just rip out the old ones carefully and use a plastic hammer to drive in new ones, finish with a dremel or something, give it a nice fret level and polish, that's it. Another 10 years ahead!

It's amazing that even in these CNC-machine days I also have come across some guitars that had the nut in a totally wrong place, just this winter this lower-end LTD / ESP that also had the nut the same amount in the wrong place. I should really work on it some day and relocate the nut...it's a locking one though so it's a tad harder to get it right. But basically it just takes some filing to shorten the fretboard some, fill in old screw holes and moving the nut...that'd probably make the guitar intonate OK but it's still got a really sorry excuse of a Floyd in it and it's heavy as hell plus the pickups are kinda shitty and frets worn...it's circa 300-400 dollars new, so I really don't know if it's worth the time and effort to fix it with so many things wrong in it and you can get a better guitar used for like 150;- or so.