Cool find! All of that is as much circumstantial evidence as you can ask for when it comes to a dug Steelie. I’d say there’s pretty much a 98% chance that’s a steel penny. You might try electrolysis to see if you can reveal some hidden detail, but I seriously doubt it would work succeed in getting a positive ID. May help preserve it though?
I still have my one and only dug Steelie stored in a pill bottle with the other four Wheaties from the spill it came out of the ground with. I probably should have tried some electrolysis in it...the rust has gotten noticeably worse in the last two years since I dug it. Now it’s a Catch-22, because it’ll disintegrate soon if I don’t do anything, but anything I do now to try and preserve it will probably destroy it even faster