You're right Richard the flexi couplings are probably a lower grade of stainless or just mild steel as stainless suffers with stress fractures quite quickly as it is harder than mild steel.
The braided stainless covering acts as a debris shield, a heat dissipater and aids in fast evaporation of water. In my experience yours although looking bad, ie not perfect, is (something we all strive for in our Morgan's) probably more structurally sound than you think. The flanges are really where the braided covers are fitted and if an end fails and the braid starts to roll back just fix it with a stainless jubilee clip or the like. It might seem drastic but tap away the rusted areas and wire brush to sound metal as rust acts as a sponge and anything you remove has no structural integrity so will not weaken the joint. Worst scenario, if you eventually have a failure there are many bespoke stainless exhaust fitting co's around who would refabricate new flexi couplings in for you, you could also request that they be removeable for replacement! Think car builder stock exhaust parts too.
