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Exactly what I would do ^I would mean knock the rust off and prime and get some color matched paint and jus touch it upMeh, I'd "fix" it. And by "Fix" it I mean I'd take a wire wheel or flap disc to it and then cover it with primer and paint. (Oh, and I wouldn't do a great job.)

On my 2003 Expy ... rust started appearing on the outside, but it had started on the inside.
So dealing with it on the outside was like ******* into the wind. Hate it when that happens. YMMV
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That's a LOTYes, that's a lot! If your engine is ok, well check cylinder compression on all 8, if ok or still within specs and you consider your truck a keeper, well then go ahead just ask for a discount.
$4,000 is a LOT. $2,000 seems reasonable but not be worth doing as these trucks are getting up there in years. How many miles does she have? If she has low miles and you want to keep her for awhile, go for it.