I had exactly this on a bv frame last year. Soda'd the post out, but had to re-dress the lug as the previous animal had tried to lever the post out with screwdrivers, bolts, god knows what else!
I would buy the longest post that fits the tube where its not damaged lower down, so 26.6. That way you have all the support you need in the tube.....the top bits just got to stop it moving. Re-dress the top of the lug and very gently file out any internal damage at the top.....else your posts will be scratched to buggery every time you put one in.
Try tinfoiling the inside of the seatpost too.
Grease.
As you frame has a decent length split behind the lug, the lug should close up round the post. Dont go mad with the clamp as it only needs to stop the post moving not crush it to death!
But hey....that's just what would do....