I am about to dig into the frame replacement. I occurs to me that the dip in the frame at the suspension mount does not have a drain hole, and is also where a lot of the rust is. Is it wise to drill a small drain hole, prime, paint it?

Any reason not to? The frame has what appears to be a plain black paint on it, nothing special. Once I get it all together my plan is to sand it all, use Loctite Rust Avenger, and paint it many, many times with Rustoleum. Probably spray the interior with oil too.

 

No reason not to, there are several drain holes in it already. Suggest when you cut you do a very solid garden hose flush down the interior. You will likely be shocked at how much rust debris comes out. Let it dry out, coat the interior with your choice of paint, fluid film, and used engine motor oil in that order woudl be my recommendation.