rust in classic camera + olympus RC batteries

I just purchased an Olympus RC that's a little rusty on one side, it
seems to be the frame on the side, i guess the camera is fine
otherwise and the owner said it worked OK last time it was used (over
a year ago. Will need a battery now though). I got it for a low price
and that's good because i was hesitant about the RC due to its
outdated batteries need.

You can see what i'm talking about here (and other pics of its
condition if you click "" "" buttons just above the picture)

http://community.webshots.com/photo/...55935147iCUKqN

What should i do with it? will it get worse? should it just leave it
alone? is it only superficial? should i try to sand it and repaint it?
should i do this while everything is intact or should i try to
reassemble the camera? or would it just do if i stick black tape over
it?

The other thing is... what's the best option for Olympus RC batteries?
I know the mercury ones are out of use, but what's the best possible
alternative, and what's the easiest and most widely available, without
having to spend much on the camera (i got it for a low price, rather
reluctantly, don't wanna spend much on it till i see some good
pictures at least). I heard the metering is inaccurate with some
alternative batteries, which to avoid?

regards