It depends on how bad the rust is in that area. Rust is a common problem in that part of the frame - I believe the older TJs did not come with a drain hole there. About a year ago, I discovered rust there and drilled a drain hole in the bottom of the frame, above the control arm mount like others have done.
I've seen people weld on some flat patches to reinforce the frame there and then it's fine. If the rust is real bad and on mutliple sides of the frame, then you may have to replace a chunk of the frame with an angled, preformed patch.
If I understand correctly, the TJ your looking at has frame rust at the rear lower control arm mounts. This is the TJ spot. The rear frame doesn't rust out like the YJ's did. The spot you have circled is the location that TJ's seem to be rotting out.
It was the best pic i could find online of the area. The rust is on both sides and I plan on buying the kit from Autorust.com. I talked tot he owner Dave yesterday, he said they are working on finalizing a kit for this area and should be available in a few weeks.
I don't have a pic of the area on the actual jeep. It is rusted through on both sides, the size is about 2-3" long by 1" high.
1997 TJ - 4.25 lift, 4.88, D30 w/ Detroit, D44 w/ Superior'ed Detroit and 33 spline shafts, Currie track bar, Warn XD9000i, Currie Tire Carrier, full armor and tube fenders, full custom trunk, Tom Woods shafts, AA SYE, Currie control arms, and Rigid lights. BIG BLACK is my baby.