Hey bud,
I have a classic with the rust around the rear wheel arches! I took it to a body shop and I had the rust cut out, sprayed, the whole front end resprayed with the rest of the car polished up to match and it cost me £600 so I don't think your price is too bad. All I will say is make sure they do a good job because I have sent mine back because the rust came back on one of the rear arches, not because they did a bad job but because they had disturbed that area and it came up next to where they had done.
Hope this helps
Cheers Marc