That is definitely overkill for this type of rust. It's like saying, cut the rear quarter panel off as well and weld a new piece for the that “lip rust” on OP's car.
Look at the spot weld lips on the yellow car. It's very bent now from all the drilling and hammering.
It would be fixed, but would it be detectable afterwards?
A good shop would recommend a patch panel, and it can be easily fabricated.
Better yet, buy the replacement piece and cut out the small section needed, and replace the rusted area on the white car.
That is what most good restoration shops would do.
It's better to keep the original pot welds if possible.
You are correct though, new metal is the best way to solve the rust issue!!!
I’ve unfortunately and briefly owed a BMW that was fixed by a highly reputable body shop in the GTA (won’t mention the name). Some serious rear panel replacements occurred.
I always found water in the battery area after driving in heavy water.
When they re-welded the new panels (drilled out old spot welds), I guess they never could get it to seal like the factory could.
They indicated it couldn’t have been their work, it must be something else.
Auctioned the car off.