How bad is this damaged lug I have noticed a little crack in one of the lugs of my gazelle steel frame. I hav not ridden it since, because I am worried it will break.

Here are some pictures. The lug in question is the one connecting the downtube and the steering tube. And the crack is located at the bottom.

I know it is not in class A condition but it would make an allright work horse for errands and such.
Do you think this crack is critcal? Or will it be ok as long as I am not doing downhill challenges?

Thanks!
If you're talking about the crack running from the opening down into the fillet, that doesn't appear to be likely to seriously affect integrity (though I'm sure there are some here who will disagree).  The lug in that area is reenforced by the steering tube, so there's very little stress at that point.  (In fact the crack may have been there since manufacture -- it looks like a touch of braze was placed over the crack at some point.)

But you do need to be concerned that the crack might propagate over time and turn sideways in the fillet area.  That would threaten integrity.  So you should check the crack regularly to be sure it's not getting worse.

But before integrity is threatened the crack would have to get significantly worse.  Even then, failure would be unlikely to be catastrophic -- unless you're totally out of it you'd notice the joint flexing before it went entirely, and a bike can remain rideable (though I don't recommend it) even with the downtube entirely separated.