Should this section of water line be replaced?
This can be a problem with old galvanized pipe if you had pieces break inside I would expect the same or worse here. I would purchase a kit for an emergency repair because my experience has been when 1 piece crumbles the rest is in similar shape. You should look into driving some ground rods also years ago houses only had 1 ground the water pipe, I have worked in a community that removed the metal pipe and installed plastic but they did not install ground rods, people were getting shocked so it would be a good idea to add them now while you are working in that area. Changing from galvanized to copper don’t forget to get a dielectric Union this keeps the copper from creating a circuit with the galvanized pipe and electrolysis eating the pipe in short time. After seeing the latest photo I would plan to replace everything from the Union on the meter to the house. This still could turn into a can of worms but I have had fewer problems with heavy cast than galvanized, the galvanized usually corrodes where the threads are cut through the zinc coating just as yours probably will.