Why do the jack holes always rust?
 

Most of the w123 MBs I see with some rust always seem to have it around the jack holes.

Why is this area prone to rust?

Do jack hole plugs prevent the rust from starting?

Any rust that consistantly occurs in the same spot on a given model is from,,, you guessed it,, an engineering or assembly defect. Moisture must be getting in those areas and just starts doing it's work. How to prevent it is something one would have to study to come up with a reasonable solution.

Seems like a lot of them are missing
 

It seems like a lot of the plugs are missing on the ones I've observed. So, do the plugs, if left in, prevent rust?

The drain plugs on the wheelwells also deteriorate over time. They need to be covered again with new plugs, otherwise water will seep in there too not just on the jack holes themselves.