massive rust fix

I would get some real rough sand paper and hit the rusted areas up. Get them down to the bare metal and spray some primer over it to keep the rust at bay. From there, you have three options:
1) Repair with fiberglass and/or bondo
2) Cut the rusted section out, and replace with a good section from a donor car
3) Shape some steel to form a replacement, and weld it in

I would do 2 or 3 if it was me, as it is more permanent. You can use fiberglass/bondo to do it though. Look at michaelp's car for an example of that being used pretty well. I'm not sure if he has any pics of the repair up on this site or not. I'm sure he'd be happy to point you to some if you asked him.

Keep in mind that repairs using fiberglass will not keep the rust from coming back. The floorboards on my 240Z were repaired using fiberglass, and over the years the rust came back and has taken over the rest of the floorboards. Also, if the new steel you weld in isn't sealed properly, it will rust too. So make sure to paint both sides of any repair.

^^^ What he said.

Another option is to find an unrusted body and swap your good motor in.