is the rust on the body or on the actual axle? if it is on the axle, I would not stress it. I mean, before I cut up my 41 plymouth, it had the original rear axle and it was rusty, I mean spent it's entire life in the north east where we salt the crap out of roads rusty, but completely functional.
If it is the body your worried about, best bet is to completely cut out all the rust and weld in a patch. you can sand it down and pain it, but the oxidation process has already started and that will only be a very temporary fix.