Yes, it looks like that is what's happening. There is some flaking rust on the front side of the pan as well.
I wonder if i could maybe clean it off and coat it with POR 15, or rusty metal primer, then JB weld it. I know that wouldn't be a permanant fix, but maybe buy some time while I try and find someone to replace it for me. I don't want to even attempt it myself, nor do I want to pay the "stealership" to do it. I usually do my work after hours in the shop at work, but there's only an hour or 2 that I can work in there, and I can't leave it unfinshed, tying up a bay.
If there were another pan that would fit, I wouldn't even care about the piece on the side....unless it is necessary. Do T-Birds, and Cougars have the low oil sensor?
I guess rust is a way of life here in New England.