jshudson,
The Brownell product is able to be used with metal that is not 100% clean. It will go through very light oil if need be. That said, the first thing I'd do is lightly polish the effected area with some fine steel wool. What you are doing is two fold. 1. removing surface rust, chemical scoring, and light surface pitting. 2. blending the effected area with the surrounding surface that retains the original finish.
Now steel wool has oil on it to prevent itself from rusting. But with the Brownell's bluing, this has never been an issue. Once you have the effected area polished and blended, apply the blueing with a clean cloth. Don't worry about the surrounding area. It will take more than one coating to get the metal dark, but a trick you can do is: Simply apply the blueing. Wait till dry. Lightly polish with 0000 steel wool. Reapply until you are satisfied that the colors are a match. Then let it sit a day, and on the following day, take some very coarse cheap papertowels and do a DRY rubbing of the finish. Believe it or not, this will do a fantastic polish of both your repair and the remaining finish near it. Rub with LIGHT pressure and do the entire barrell. This will do wonders for your overall appearence of your weapon. Don't be surprised if you see some trace of rust on the paper. It is doing a polish on the surrounding metal that has surfacre rust and it is just pulling it off the metal. (Used to use the old brown papertowels like the ones in the school bathroom from the 50's, but can't find them much these days!) After the towel rub, lightly oil the barrel and go shoot!
This type of finish repair will effect the collector value, but not as much as a complete reblue. A log of repairs was always kept in my shop for my customers if they wished to sell a classic and required such information for the buyer. Having a list of repairs from a gunsmith went a long way in gaining the confidence of the buyer.
Good luck on your work. I hope in the future to see you providing instructions to the 'new guys' to the forum on gunsmithing and such. From your genuine interest here, I believe that you're going to move on to many fine projects in the future.
Regards,
Wade