Is there a way to use iPhoto to restore it?
It will depend on how bad the image corruption is.
As Larry said, iPhoto's tools are limited and meant to be used with new photos, not for image restoration.
The bleaching will have done two things - shift the color, because the different pigments will be deteriorated differently. And reduce the saturation.
Open the "Adjust" panel in the "Edit" panel.
- Try first to get the color right by using the White Correction tools. Click the color picker and sample a spot that should be gray. Then adjust the Temperature and tint sliders. This will only work, if the color deterioration is the same in all parts of the image.
- Then adjust the saturation of the photo.

If you cannot get the colours right, you might consider to change the photo to "Black&White" by using the B&W Effect. Sometimes older photos will still look great as B&W, if you adjust the contrast.