Yep, that ain't varnish! Old timers trick was to fill 1/3 of the way with small gravel, strap it firmly to the rim of a tractor and drive around with it all day.
With that level of rust, you may open up some pinholes once you clean it all off. If so, you could try one of the liquid gas tank sealers.
Not sure what it would do to the paint, or if you care, but the electrolysis rust removal method may work as well (search YouTube).