yes epoxy will seal off the rust . rust is created by electrolysis and fed by moisture and oxygen. the more you remove the better. after blasting and washing with dawn soap the car will get a light orange tint to it. this is surface rust but it is no problem. the more iron in your water the more you will see. what it does do is tell me the metal is clean. simple brush off with red scotchbrite and it's ready.
always follow paint mfg recommendations . if they say don't do it then don't think for a second you have more knowledge than the people who make it.