Is the rudder shaft bent? Bring it up, then put a straight edge on it on each side to see. It sounds like it's bent, and is binding when it reaches the bend.
It it is not bent, use fine sandpaper to remove all the crud on the shaft before oiling it and trying again.
If it is bent, then you will need to devise a way to bend it back. That will mean determining which way it is bent, going 180 degrees from that dimension, and applying force both at the top and at the bottom of the shaft. It likely bent just below the lower entrance of the shaft into the
hull. It will take a bunch of force, and you really cannot use enough heat to lessen the task - you'd melt your boat.
Failing in that, the shaft is toast, so cut it off and start over.