Not good. However, have you had a look at the bearings yet? I'd suggest stripping them down and giving the bearing surfaces and cones a good clean with degreaser. Then inspect them for any pitting etc. If they are smooth, just rebuild everything with new ball bearings and good quality grease. They should be smooth as the proverbials.
It may also be worth replacing the freehub body. These often wear more quickly than the rest of the hub.
If the cones or bearing races are worn or damaged, then you can, with difficulty, get replacement cones. The bearing surface can be separated from the hub body on DX hubs, but new replacements aren't available.
It's usually a better idea in this instance to look for a new hub rather than go for the time consuming and tricky bearing race swap from a donor hub.
If the pitting isn't too bad, then you could try the toothpaste trick, and before you ask this isn't a joke...
Build up the hub with new bearings as before, but instead of grease, use toothpaste.
Go for a couple of rides and the mild abrasive effect of the toothpaste will polish up the bearing surfaces. Then disassemble, rinse out the toothpaste and rebuild with grease.
It'll hopefully give you some minty fresh new hubs.
There's a guide to hub servicing here: --> http://www.drystonepaul.com/maintenance ... r_1993.jpg