I've been collecting Raleigh 3 speeds for the past couple of years, some of which have been well kept by their previous owners; paint and decals in very good shape. Several others not so well cared for. One of those I stripped down and had it sand blasted and powder coated, then I reassembled it. That bike is shown in my avitar.

Without seeing the actual condition of your Raleigh, but based on what you say, I personally would take care of the rust on the fenders and repaint, even it it means doing the frame as well to ensure a match. Decals for the Sports are available from several sources. Another option would be to search e-Bay for fenders; even NOS fenders show up now and then.