Well, various feedbacks:

It may be possible that there are people who can hand-paint a frame's rust spots with a brush and have their work indistinguishable from the factory paint. I'm NOT one of them. I did it properly - I scraped off all the loose rust (and not all rust was visible - some places the paint had bubbled - under every bubble I found a rust spot 1.5 to 2 x the diameter of the paint bubble). I used a rust fixer to stabilize remaining surface rust in the spots. I lightly sanded the excess rust-fixer smooth - then applied a primer. Finally, I used an enamel that exactly matched the paint color (from the store's color card & from the colored bottle cap). I applied the enamel, waited overnight and surprise - the enamel was at least three shades lighter than the factory paint. So now my options are to sand down and start over (another two days' work wasted) or live with 10% of the frame looking mottled. Sigh...

So next I figured that some camouflage would distract attention from the mottled look - I printed some decals on my color laser printer. After fighting the printer for an hour to get it to accept the custom-sized decal paper (I'll never buy another HP printer), I got the decals printed. They looked gorgeous! Bright, bold and contrasty enough to pop out against the dark grey frame. So I go to install them... Surprise again - the decals aren't opaque - they are translucent. So much so that one can hardly notice the decal against the background color! Throw those away - another morning's work gone...

So lessons learned (for me):

1. If it's more than a small spot - don't bother trying to touch it up. Maybe 10 to 15% of this frame had rust on it, so I should have just had it sand-blasted and painted. The touch-up attempt was nothing but a massive waste of time & resources.

2. Need decals? Buy some. Unless your frame is a light (LIGHT) color, the decals you print yourself won't show up. If I decide to keep this bike, I may go with white for the frame color and THEN try printing some decals, but even then, I have my doubts...

3. Examine bikes BEFORE you buy them. Bad paint = mega $$$ to fix. Of course, if you don't mind fugly, then pedal on!

If I like the current bike as much as I expect to, then a sandblast & spray-can job (at a minimum) will be the way to fly. But of course, to get there, I'll need to strip the whole frame again & rebuild it after painting (sigh...). So for the time being, I'll ride the scabrous (and I mean that adjective in all three of its common meanings - "having a rough surface" - "indecent or obscene" - "full of difficulties") thing until I make a "keep-or-cull" decision. May your rides be less troublesome and your experiences less ignominious.

FH