Fun. I've battled rust on my older Benzes an spend a LOT of time and effort on it.
My advice? Don't fight it, you never beat it...only delay it in increments proportional to the amount of time, effort, money, sweat and blood you put into it.
Try and source new aftermarket fenders and have them painted. You can install yourself. Done correctly, they will last several years. I've done this to an E320 in our extended family, and Chad300 posted a thread on some great work he has done on a W123 I think (replaced panels as well).
If you are determined to tackle the rust, remove as much as you can, weld in new metal and use minimal bondo, and treat with POR15. Good luck!
This reminds me...I need to book my GL450 for a Krown treatment soon...never too early to protect a vehicle.