I picked up a cheap Trek 460 with "True Temper Cromoly" tubes. I have zero interest in stripping it down and re-painting it. It will be stored outside, on my covered porch (no room inside the apartment!). Should I just cover the rust spots with some nail polish and call it a day? What should I do about the rust underneath the paint?

Since you want to touch-up only (and are willing to live with that splotchy look) Here's what I'd do: Get some SEM Rust Mort (it's a blend of phosphoric acid and "stuff") and some small detail brushes. Clean the whole frame with a solvent wash (denatured alcohol or acetone for example, wear gloves). Apply the Rust Mort with detail brush to all the exposed rust, you'll need to keep applying, several times, to keep it wet until it consumes and converts the rust to iron phosphate. Where you have those little bubbles of rust underneath paint you have to decide whether to break the blisters (I would) and apply the acid or leave them unbroken.
I doubt you'll find nail polish in that exact shade of blue, so if you can't then get model paints you can mix to achieve a match. Dry off the acid treated spots with a clean cloth, paint over the spots and scratches and overlap edges and apply as many coats needed to get complete coverage. After the paint has cured (wait 2 weeks for certainty) wax the entire (cleaned) frame with high quality automotive wax (I use Mother's Pure Carnuba with NO cleaners; cleaners are abrasive). Keep it waxed, apply periodically.

Thats nothing! You've got 10 years before the rust hits the fan. Unless you ride on salty roads in the rain. Good luck. Don't worry about it.

SoreFeet is right, however, if you go into this business:
Clean as much rust off the steel as possible, by scraping with a knife, manual or powered wire brush, and/or sanding. Rust converter does turn ferric oxide (rust) into ferric phosphate, which protects the metal. Using a good primer is more important for subsequent protection than whatever the top (color) coat is, so don't omit a coat of primer.

I'm beginning to think that Trek paint was ***t. I've posted previously about my '82 frame that's seen extremely little use, and yet the paint is very chippy. It has some bubbled areas near/on the BB, and bottom of downtube and also at the base of the head tube. Well today I went at them with a knife, and all I can say is: "A Friday-afternoon paint job, after lunch at the bar!" In the bubbled areas, the paint would actually chip up in sheets, with practically no adhesion. It didn't even look like there was any primer there.

Thanks guys. I'm not sure what I'll do. The rust does bother me. I'm just not sure it bothers me enough to spend hours and hours stripping it down to the base. I'll probably just go with sorefeet. This is no fancy Italian bike.