How much rust is too much?

It is scary at first, but practice on scrap, then you get the hang of it. Then freak out about fillers, primer, and paint, lol. Chill out, not that hard. Tools are the main thing. Air 3" disc cutters, a Bosch saber saw, variable, makes life so easy,14" air body file with 36 grit, the scotch paint removers, ( no heat). Basically it is keep heat of the sheet metal. Use the internet, james in BBD is an expert, join there, and search.
Make the patch bigger than the cut out part. then attach the new on(screw, rivet) then cut through both, at the same time. Then enlarge the opening to at least 1/16", the saber does that, and is more gentle to the metal. If not using the 1/16", then grind more space out with the 3" disc, then butt weld, with wet rag.