I'm doing rust repair on my car now and there's no way in hell I'm using any bondo. The previous owner sold me the car saying he "fixed all the rust" which i was very happy about. After sanding it down i found out that this thing must have 5 gallons of bondo on it. He didn't replace any metal! Just bondo! I was furious. Do it right the first time. The rust will come back if you don't cut it out.
You can use an angle grinder for bigger areas. I use a dremel with a cutting bit for small areas. Some guys use a plasma cutter but I'd worry about warping the metal. I guess in small areas it would be ok.