On the other hand.. never having scrapped any car, regardless of its age or mileage;
If this 500 costs $500, it's not bad rust..
But if the seller wants $20,000 for it, then it's a bit expensive.
My analysis is that moisture has gotten between the inner and outer wings. At the back of the wheel arch, it may have drained out through gaps in the panel seams, or it may also have rusted that area too (it's behind the bumper/wheel arch liners so it may just not be visible). You would have to stick your head between the bumper and the rear wheel arch liners to have a look and be sure.
At the front of the wheel arch, the moisture will have followed the wheel arch curve down to the sills. The sills are high-strength steel and galvanized, so any water collecting in there won't do too much damage too soon.. (although even galvo' will corrode in time).
Inside the wing (the reverse may have less electro-plating on it) that moisture/mud/grit will collect and rot the panel from the inside out, as your photos show. If you tap a nail into the rust bubbles, it'll probably go through the panel fairly easily.
Now, anything is repairable. This one needs the paint taken off, and the area including all the rust sanded down. If the rust has caused small holes, those could be filled with body filler, once the metal has been treated to remove all the corrosion. If the holes join up to form "gashes" then it's a better long term solution to weld in sheet metal where the gash is.
In either case, you will have to respray the repair.. and the one panel that is the biggest PITA to re-spray is … you guessed it. The 3/4 panel runs from the bootlid to the trailing edge of the door.. from the sill all the way up to the roof strap. Big (expensive) spray job.
Alternatively, you could patch it (filler or new sheet metal welded in) and just spray that area (regardless that it will look visibly repaired) or just leave it and the car will b efine for a couple more years, although the rust bubbles will get worse/bigger and the paint will flake off and the sills will start corroding big time... it depends what you want to put up with/pay to fix.
You also need to work out why the seam on the wheel arches has started leaking in the first place. If the car has no rear wheel arch liners fitted, that would do it.. but 500s have no rear wheel arch liners because they get removed to fix accident damage and then lost/forgotten and not replaced.
Or it could have wheel arch liners fitted but the car was hit in the rear hard enough to deform both outer wings (the boot floor too, I'd imagine) and wrench it away from the inner wings. Presumably then it was straightened out and "repaired" but without anyone sealing the separation between the inner and outer wings, leading to this problem.
So.... if you want a nice, tidy 500 that's not going to need any effort to keep in good condition, this one is not for you. If it's dirt cheap and/or your dad owns a body shop and you like being hands on... then give it a punt. It needs remedial works soon though, before the sills notice all the incoming moisture and start to rot too. That would be a whole different world of aggro'.
Ralf S.