I wouldn't take a canoe with visible cracks out on any lake.

If the canoe is worth fixing, fix it. (Not sure why anyone would buy a canoe in that shape without a restoration plan). Traditional epoxies (eg West System) do not bond well to polyethylene, but there are newer epoxies designed specifically for this application. Fibreglass + epoxy patching is pretty straightforward, though epoxy usually clouds with exposure to UV rays, and you may need a coat or two of spar varnish or paint on top.

Two guys in a 16' canoe on a big lake will be completely safe under some circumstances, unsafe in others. Find out the maximum weight capacity of the 158, and stay with those limits. Common sense will tell you what kind of waves you should paddle in, and what kind you should not.