The first pic is pretty bad, but not worth repairing. The cancer has started and there's no way to get rid of it all. How old is the car and how long do you plan on keeping it? And where do you live?
Even with all that info, you can spray can it with something if you want, but I would just put the skirts back on and try to forget about it. Its going to cost way too much to repair correctly and even then there will be more rust coming.