I'm no physicist, but, considering the relatively cheap price of microwaves nowadays, I wouldn't take the chance. It's probably OK; the paint has just peeled away from the heat, but what might have happened to the shielding under (or above, in this case) which keeps stray microwaves inside, I don't know. A physicist or some other expert could check the machine for stray microwaves eminating from the machine, but that would cost much more than the machine is worth. I'd just get a new one.
