From the rust, I'd say it had a steel plug in it in the past.
I'd really examine things close and see if the stripped off threads came from the heater, the plug, or both. Why? Because if the majority of the threads are left in the heater, I'd be able to chase them with the right sized tap. Then I'd hunt for a plastic or brass drain plug - something soft - coat the threads with teflon paste and screw it in. Then keep fingers crossed and turn things on to leak check it.
If the threads are torn out of the heater, which is more likely as copper and brass are both softer than steel, there's nothing to lose by going up a size. If you destroy it in the process, it's no loss, because it's useless right now anyway. Ask around, you probably know some handy man who has a set of pipe taps. A reamer or the right size drill might be harder to find.
If you're competant with wrenches, but don't feel like trying the drill and tap, dismantle the thing and take the stripped part to a few auto parts stores that have a machine shop. They're usually pretty good at fixing stripped threads. Someone would probably take on the challenge.
