I'm in the process of sanding down my hood, fender tops, hatch top and roof due to paint peeling. (Just came in to check my email and jump on the forum.) The factory paint was peeling due to poor adhesion. The sun just make the problem worse. I was able to remove all the paint from my hood and roof with a razor blade...I shouldn't be able to do that. All the horizontal surfaces have this problem on my jeep. I have been taking pics of the process. The vertical surfaces are all fine, except for a few dings here and there.
As far as the rust I sand in down completely with 80 grit to bare metal, , spray it with etching primer,do any bodywork required, 2K primer, block with 150, more bodywork if required then final sand with 320, prep then shoot the color.