That's a typical rust area for Jeeps in the midwest-east coast.
Is the other side solid?
Looks like you'll be dropping the gas tank to get better access to it. You could do this one of two ways. One, try to salvage as much of the old material as possible or replace it all while you're down there.
If you want to replace it all then that would mean sectioning the frame and removing the rear crossmember. You'd then replace the rear crossmember with some heavier material and probably integrate a bumper into it.
Look familiar?
http://www.jeepforum.com/forum/showthread.php?t=150584http://www.lowtech.net/gallery/jeepNotice the first guy reinforced the weld with that hexagon shape piece. This relieves some of the stress from welding. If you grind the welds smooth, no one would be the wiser to the patch.