If you like burn through and panel warpage go right ahead. Save yourself the trouble and buy a decent mig with gas. It can still be had for about $500.
And don’t use fiberglass on metal. They both expand differently so it will eventually crack.
Really though, sanding it down and filling it with bondo isn’t going to do anything in the long term. It will hide it for a while but you’re just going to have to do it again. you may aswell just do it right the first time. Cut out the cancer and weld in new peices. You will obviously still need the Bondo to smooth it over. Do yourself another favour and use atleast the Bondo gold. It is so much easier to work with.
If you are set on going the cheap route and try to sand away the rust and then cover it up, go and get whats called “naval jelly”. It is a pink substance comes in a little plastic container. It is a rust inhibitor that has been around for liek 25 years. Give it a try.