Hi Rob, I know just what it is like to discover rust like that! I really get annoyed with all the previous owners who advertise their cars on eBay as being 'fully galvanised, so no rust problems' - muppets, 25 years of road abuse will get the better of any galvanised steel! - Rant over..
Anyway, it may not be as bad as it looks, flaky underseal always looks worse. What you need to do is get a good rotary wire brush on your drill, goggles and face mask on, then give the seam a really good clean, you may be pleasantly surprised..

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However, if you push the outer sill and you hear creaking and cracking noises from inside, your problem may be more widespread. All is not lost, many owners have faced this issue. I managed to get mine done (see my restoration thread), by purchasing a good set from a breakers (£100/pair), got a mobile welder to help fit them (£80 a side). I did have to do a lot of grinding and cleaning and prep work, but I like to keep costs down anyway. Also, finishing them with the right products helps. So, mine probably cost me around £300 to £340 tops

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Your rear sill panels are pretty shot, but repair panels can be bought for just that area, and that is not too structural as the suspension points are inboard of that area. If you have a grinder, perhaps it would be a good idea to cut that section to allow you to inspect the inside of the sill panel, as it is going to have to come out at some point anyway.
Have you done any body metalwork before?
Regards, Rhett.