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As others say, there's no sanding out that rust, it'll have to be cut out. Fortunately, your car did come with at least some replacement metal... so I'd start there. If you want to do a stepwise approach instead of just doing the whole thing at once, I'd do the frame/floor/firewall/rockers (if needed) all at the same time, and I'd do that first. That's the foundation of the car and if it's not any good, it doesn't matter what you do with the rest of the car as it'll never be solid.

The cowl is also very likely to need going through. It is a structural part, but if you're not planning on painting the thing, just leave it as long as it's not too rotted. Many people on this board acquire cars that have trashed leaking cowls. Out of sight, out of mind I guess. Now it would be dumb to paint it before fixing that part, but if you're not going to paint it it probably doesn't matter that much.

After fixing the frame/floors, you could then do your quarters/wheelwells/trunk extensions. Do the decklid/fender/doors last, because those are simple bolt on/off parts that are easy to fix/replace and they're not terribly structural.

After you fix the body, then the mechanicals should be easy. Getting a car mechanically solid is not hard and since it already runs, the majority of the work has been done for you. Interior is also more or less irrelevant as far as I'm concerned.

I think you overpaid a little, but it's done now so who cares. Fix the foundation of the car so it won't break in half if you get in a wreck, and then go rock it. It'll never be worth what you put into it, but it'll also never really lose its value unless you REALLY hack the repairs. You can't really go that much lower than 2 grand...
 
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