My 1951 house has redwood siding and has lead based primer under three coats of paint. The paint is mostly in good conditions but a few locations are chipping badly, nails are rusting, and the redwood (horizontal pieces in lower 4-ft w/ vertical planks above) is badly degraded around some nails and splitting at some locations, mostly garage. New siding is not an options. I have scraped the flaking paint (containing chips for disposal) and screwed reinforcing plates to the back of the siding to minimize movement. Problems are likely due to moisture so I have painted the back where tar paper was not present; other locations likely due to cracks due to flexing at joints between horizontal & vertical and at nails - which I am caulking. To avoid sanding and to smooth the surface, I plan to use Kelly-Moore Kel-Bond Ultra primer (XIM Peel-Bond not available in my area).
I am concerned about wood that has degraded, mostly around rusted nails, and about sealing over the rusted nails. Is just wire-brushing degraded areas before applying caulk OK or should I drive in nails & use Dremel to removed degraded wood full depth? Maybe brush on some Wood hardener instead? Anyone have an opinion on quality of the Kel-Bond vs. Peel bond? Thanks.