I highly recommend "Naval Jelly" brand Rust Dissolver. It looks to me that you need to get a little more aggressive with the grinder first. Then use the Naval Jelly per the directions.
After that, you need to feather the paint a little more with some fine sandpaper. Then I would use some spray can primer that is specifically for covering rust.
Then as Tom states above, hit it with some paint that is close in color. Perhaps something from JD.
Richard