Hello Brian,
That's hot rolled mild steel (HRS) and it has its place. It's usually a good mild steel, but whether it's inferior depends entirely upon what you intend to use it for on a steam loco. I rarely use a hot rolled shape (rounds, bars, channels) on my loco but I do use quite a bit of HRS angle. The blue-black surface is an oxide coating imparted during the the rolling and cooling process.
Hot rolled sheet or plate on the other hand, sometimes called "black-iron" in the fabrications shops, is a hot-rolled mild steel. It can be had black, with the oxide left on, or pickled, where the sheet surface is acid etched to remove the oxide. Some suppliers have only black, and some will have both black and pickled.
Personally, HRS is the only structural plate material I use on my projects, but then I build British locos which use far more plate in their frames than do American locos. In general it's one of my favorite materials for a number of reasons. It resists rust, it's tough but cuts and machines relatively easily, has minimal stress and deformation, absorbs the bumps and grinds of ongoing construction without marring, primes and paints well, it's relatively inexpensive, and just about any good sheet metal shop is going to have stocks. The only drawback I've come across is if I want to solder some together the oxide must be filed off anywhere I want the solder to flow. Most of these attributes apply to HRS shapes also.
Hot rolled shapes and plate aren't for everything but are very good for specific uses.