Yes, strip and repaint would be the absolue best (Powder coat would also work). However, it can cost a lot (IMHO). So it would depend a little on the end result you are trying to achieve. I'd be tempted to attack an area with rubbing compound to see if the rust and loosened paint will clean up. If that doesn't work, fine steel wool or sand paper on the end of a pencil or dowel. You can bring the fork and/or frame into a paint store or home depot and have an oil based enamel color matched. Others use nail polish or model paint. Of course, it will not perfectly match the sheen of the original paint and will be noticeable at a certain distance. When I was into cheap old motorcycles I used to rate them by how far away you had to stand to think "that's a nice bike". It might be have been a 5 foot bike or a 20 foot bike. This would be similar. If you want a collector, spend the money. If you want a presentable, functional bike without rust, try cleaning up the rust/loose paint and touch it up.