Well, I think I have determined how I want to proceed with the floor repair and carpet install. I will cut out the rust spots and weld in new metal where needed. All the original horsehair padding is coming out cause it is old, dirty and damp. Then I will hit the entire floor with the wire wheel to clean it of all gunk and debris. After a good wipe down with solvent it will get a coat of herculiner (bedliner material for trucks). Lowes has underlayment for floating floors that is plastic coated on one side and thick sound deadener mat on the other side. I will cover the entire floor with that, plastic side down, then a layer of heavy carpet padding and another layer of the underlayment, plastic side up. The edges will get duct taped to limit moisture infiltration into the padding and to help ensure the ride is quiet. Then the carpet will go over that. The herculiner is near bulletproff and that should really help seal all the nooks and crannies. As much as possible I will also coat the underside of the cabin area with the herculiner to limit any further rust.
I think I will put the underlayment under the door panels and the plastic trim panels covering the wheel wells. It should help seal things and deaden some road noise.