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I can't advise you what to do, only you will know your own competence and what standards you are willing to accept.
However, here's what I would do;
1. Jack up rear of car & remove wheel, leaving car secured on axle stand.
2 Using orbital sander & 80 or 120-grit sanding discs, remove all traces of rust on the inside & outside of the wheelarch.
3. Go over the same areas with 320-grit discs to get a feathered edge and a smoother surface).
4. Apply Kurust to the surface which will eliminate any rust spots pitted in the surface.
5. Apply a few (3-4) light coats of primer - allow to dry, and very lightly rub down with 800-grit wet & dry paper.
6. Apply (4-5) coats of basecoat (start light, but get progressively heavier with each successive coat). Again, allow to dry.
7. If your car has a pearlescent finish, you will need to add lacquer, if not - leave it for a week, and then lightly cut-back with 'T'-cut, then lightly polish.
Don't use masking tape as you don't want a 'stepped' finish.
To finish it off, apply underseal/hammerite to the inside edge of the wheelarch - this will give extra protection where its needed.
You are realistically looking at 2 days work if you are working outside, half that if you can enjoy the luxury of working indoors.
Cost of materials (circa £40-£50).
Be under no illusion, its a bigger job than it looks.
Hope that helps,
This job should never be complete - the day I think I've done it all, is the day I resign.
Currently in VelSatisfied's garage:
2005 FIAT Ducato 2.8JTD LWB Gran Volume, 2000 Kawasaki ZZR 1100 D7 'fullpower' in black + full GIVI & KAPPA luggage, 2007 MB R-Class 320 CDi Sport LWB uprated by Brabus to 300Bhp don't know if there's a 155mph limiter - will be fun finding out! 2004 Mercedes Vaneo 1.7 CDi Ambiente 7-seater