I'd go for the LTD from the bike shop, as you can develop a relationship with them, and they probably have some guarantee. Also, you can ride it around a bit and have them size it up for you. If the rust is on the wheels and components (vice the frame), it should be easy for you to clean off (there are quite a few threads on this very forum about it).
I'm guessing this is a 3 speed LTD? Some were 10 speeds with derailleurs, vice the Sturmey Archer hub; I prefer the 3 speed, myself, for my city riding.