Well, I've managed to get the paint to stick on a few cars and withstand the test of time and weather, so without going into a major philosophical discussion about what you should do or shouldn't do I can tell you what I have learned over the years from pros and from my own experience, but like others said here, be safe!! And remember, the best body man in the world is worthless when he's lying in a hospital bed!!
First, you need to get this book before you do anything
http://www.eastwood.com/key-to-metal-bumping-book.html Yes, it's old print but has very useful information. The better you prep the metal the less bondo you will need and the better life will be. Learn to work with metal!! Now, there are plenty of opinions to fixing dents from a high end resto or a just fix the dent in the least amount of time possible. The end result can be acceptable when it comes out of the booth but the long term results may not be the same. Whatever method you use depends on who you are working for.
Prepping surface for bondo: The bare metal surface needs to be roughed up to give the bondo some "tooth" to grab on to. Grind the repair area to bare metal with 16 grit. Apply bondo, cheese grate and sand with 40 grit. This will take practice and you will need to develop a feel to know when you are ready for the next step. Use an old T shirt wrapped around your hand to help magnify the surface. Try it! A dark ring around the bondo area usually means that area is low. You just want to break the edge.
Rust repair: Cutting out the rust and welding in a panel is common on the old stuff but metal shrinks when you weld it so not that easy. Best I can say is go slow and by that I mean don't weld up the whole panel right away. Make a few tacks or short seams then let it cool and bang it out straight again. Repeat until you have a welded seam all around. Now, there is a lot of voodoo about rust coming back, hence the trerm "rust never sleeps" (A bit of a Neil Young reference there - yeah, I'm a fan!) but if you want to keep it asleep you need to SEAL BOTH SIDES OF THE WELD REPAIR. The back side can be sprayed with undercoating, paint, the oily goo that Eastwood sells, or even roofing cement but never primer by itself. The main thing is to keep the bare clean metal out of an oxidizing environment.
When you get to the primer stage use a high build catalysed primer (common these days). I like to cut the first primer application with 80 grit and that will be enough to fill the 40 grit scratches. Eventually you will block with 180. The more you block the better. The idea is to average out the subtle highs and lows. I use a criss cross pattern and pay attention to the body contour when I sand. It's easy to build up too much primer and that can lead to other problems because the paint is too thick. Guide coat can be used to help find the lows. It's also important to have all the panels pre fitted and better yet, in place when you do the body work. Working on a fender on a stand may go well but when installed on the car the contour may not match the door for example.
Final coat of primer and wet sand with 400. Some will say 600 and I've seen good results using both. I guess it depends how the paint covers and fills the wet sand scratches.
Best of luck to you, wear a resperator and a real dust mask when sanding, and hopefully you will have your own high end hot rod shop someday - or maybe a TV show!!