You mentioned you sandblasted some of the paint off. Why can't you just sandblast away the rust off of the rusted areas? That would be the best method, and spray Ospho on those areas right after. Once the rust is gone, I'd spray 1 or 2 coats of 2 part epoxy primer (using a spray gun, not a rattle can). Followed by 2 or 3 coats of high build primer. Fog on a guide coat, and start block sanding with 220 grit paper. Any low spots will be evident by the remaining guide coat. Either shoot more coats of high build primer, or if the areas are really low, spread some plastic filler over them. Keep priming and sanding until the surfaces are flat. Rub the fenders down with 400 grit paper, blow it off, tack rag it, and you're ready for paint.
My YJ/CJ V8 Magnum Build: http://jeepforum.com/forum/f22/magnum-force-mopar-mans-build-1412306/