Thanks guys. Here is my plan after a week of reading bmw forums, autobody forums and watching youtube videos with good trusted sources like Kevin Tetz for example.
Because I want to paint the car and dont have time, I will do the following to extend the life of the body panels. I have uses POR-15 and it isn't fun. Also for outside exposed panels I would tend to stay away due to the thickness and UV incompatibilities.
I have cleaned the area, have some etch rust remover on order. Then I will epoxy the area, a 2k product in a spray can. Then instead of filling and then adding another surface primer, which then I should paint but not wanting to do that now, I will just paint over the primer with factory color match spray paint from paintscratch.com. I will then clear it and then buff the whole trunk. Everything via spray can for now. My air compressor is not really strong enough and don't need another expense either. I can take this approach for other areas of the car for now. The car is currently a 20 footer with low light, lol, so this will not degrade and maybe enhance the appearance after I buff it.
I wanted the bright read factory color so I can paint my primered iS lip, maybe mtech1 rear spoiler and maybe the iS side skirts I have. I still need to install them, which I would like to do before the full car paint job.
when I am ready to do the whole car, I can then sand/prep/fill as needed. At least the epoxy can work better than other products in keeping moisture out and preventing rust. The panel is very intact minus the pits.
I will of course journal it on my thread.