It's perfectly possible to do this and get a beautiful result : this bike I believe was originally painted, and then chromed early on in it's history. The result is not 100% perfect (BB, to get this right would have required a lot of skilled work filling file and casting marks), but overall very impressive.
http://www.reneherse.com/
I'm one of the people on the list who believes in keeping things as original as possible (rust stained paint will sometimes clean up amazingly well, a large patch of rust will reduce to a pinprick hole, so you should always try cleaning first before opting for a repaint), but you can also consider that some upgrades or mods are part of the history of the bike. In this case it would be ridiculous to repaint the bike grey cos that's how it most likely was originally...
The idea that rust carries on acting after cleaning/waxing is I believe incorrect, I have seen many bikes cleaned and waxed 20 years ago, they have not deteriorated one bit since. Rust (ferrous oxydes) needs oxygen, if you seal off the air supply then it can't evolve.
Alexander March
Bordeaux
France