Start the Auction at 1BTC for a casascius silver I would usually expect around 1.3 - 1.4BTC, but not sure how the tarnish would affect the price for this one.
From what I've seen tarnish has very little impact on price, though it's off a small sample set as not many seem to come up. I've only seen tarnish on raw sales. Curious if that would hold for graded/slabbed coins w/ tarnish as well.
The tarnish should not come into play as far as grading goes. The milk spotting should not either as this coin shows a fair amount as well. Nicks, dings and imperfections go into the grade. However, if the coins had no dings etc, I believe the milk spotting and tarnish would keep it from a perfect 70. I will find out for sure later today when I speak to the head grader at ICG.
Good luck with your sale and be smart, use escrow!