Heater channel is a pain in the arse to do (i did mine recently this is what is involved:
http://www.aussieveedubbers.com/forum/viewthread.php?tid=24785. If there is significant rust there, it'd be better to just swap the body for a better one.
First step is to strip back all the paint, how far you want to go with this will determine how much $$ you want to spend. You could take the body off and get it done inside and out and below. Either strip it by hand (which will take a long time and is labour intensive) or get it sandblasted by someone.
If you are tight on money you could just sand back the existing paint and go over that instead of stripping to bare metal. Although you would have to make sure the paint is stable. It's best to go back to bare metal but if $$$ is tight...
As for prep work, you would fix up rust and panelbeat out any large dents or anything like that, then you would use filler to get out smaller dents or uneven areas. Then you would etch prime the car, spray primer filler, put a guide coat over it. Sand it back smooth, then depending if the primer is thick enough you could do colour over that. Between each step you would go over the entire body with wax & grease remover.
If you've never done any panel work before it'd probably be a good idea to do some practice panels to start off with to familiarise yourself with the process. A good paintjob is in the prep.
What tools do you have and can you panelbeat and weld? You'd want to have a welder, compressor etc.