Hummmmm ... no question that the rust is a problem, but there is a big difference between a little bit of rust (discolorization) and enough rust to cause the engine to be prone to suddenly quitting in the air.
You did not say if this is a new problem or if you have been having difficulty for a while.
Did the engine ever run correctly ?
Did hobby shop guy say why / how the rust was causing the problem ?
What was / is his recommendation to fix it ?
If the engine is running good and idling good on the ground I suspect something other than rust is causing the problem.
The usual culprits come to mind ... cracked fuel lines, bad glow plug, needles not properly adjusted.

As to the rust issue, your location suggests a humid maybe even salty environment.
I use air tool oil on my engines, it is very good oil and it is pretty cheap too so you can use a lot of it.