Found more rust, what should I do?

I am going to start cutting next week, once I determine how bad it is, I will make my decision. I found the cause on the right side, I puller the drain plug and found a mud wasp nest blocking the opening. I will probably just replace the bottom 6" if its real bad.

Today I pulled everything out from underneath the back end of the car, I am going to clean, wirebrush, sand, paint, and reassemble the rear end this week. I am also going to treat and primer the underside of the car so it is ready for paint. I just got the rear brakes rebuilt and reassembled, the parking brakes are now working again, and I have new stainless braided lines, and the drums were stripped, turned, and painted.

After I get the rear back under the car, I am going to get started on the rear quarters and evaluate what needs to be done next. Then on to the rest of the bodywork and I will get it sanded down and ready for paint.