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Although I have no firsthand experience with your dilema, my guess is that encapsulating the felt with undercoating will trap moisture and make things worse over time. I wonder if there is some way to soak the felt with oil to repel moisture. I think that's always a problem between body panels regardless of what material is used.
As for the body panels, I'd sand them down again and reprime. Probably a bad idea to just cover the rust with more primer.
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Tom - '60 544, '68 220S, '70 145S, '86 745T, '06 Mazda MPV
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