I have a rust in a similar place on my 123 ,I suspect it was first caused by someone trying to jack up the car under the sill rather than the jacking point.
This has 1, bent the metal and 2, damaged the thick MB underseal allowing water to get in.and result rust.....

If you have access to a oxy/cetyline or preferably mig welder and some steel and are or know a competent welder It would be a fairly straightforward job,
clear all wiring and carpets etc remove underseal from the surrounding area, and have water and fire extinguisher close by..

I suspect it maybe a bodyshop job though, to cut out the rust and weld in new steel to make it as strong..

I am lucky one of my collegues is an artist when it comes to repairing rust to UK MOT standards and people like him are worth their weight in gold when running an older car in the salt laden roads in Scotland.

I know that in the States this may not be of use, but they seem to do all floor panels for the 123

http://www.veng.dk/UKVersion/other.en.html

Good Luck