This shot is looking up at the bottom of a turnsignal bucket. In 68, as well as other years, the turn signal bucket was welded to the fender. It appears that there was some minor damage to this area at some point and things got mangled just enough to allow rust to set in. There are two small rust holes on the fender and several more larger ones on the turnsig bucket. The entire fender including this bucket are coated with a thick layer of some asphalt based undercoating, (Ziebart?? Dunno, the PO did it). So this damage (and the usual spot at the bottom near the door post) is the only damage on the fender.
So, what do you think? Break the welds and !FIX! it ALL or just clean it up, treat it and close the holes up (JB Weld, lead, MIG, glass, whatever) and get on with the project.
I personally am leaning toward pulling the bucket off, fixing the bucket, fixing the fender and putting it all back together. But maybe that just because I'm a retired engineer with 20 years in aerospace and I'm used to massive overkill. Would it be worth it?