Remove hood.

Remove paint and undercoat from hood.

Surface treat the hood with your choice of blaster...

Apply new undercoating.

Apply paint.

Apply sealant.

And before you ask, now that you have allowed the paint to be damaged to the
metal of the hood, there is no local treatment that will stop it.

Once the damage is done, it is an all or nothing proposition.

Bobby

The question is whether the spot is caused by a rock ding that exposed
metal which is now rusting, or if the paint is blistering and breaking
thru to show rust underneath.  If the latter, NoNoBadDog has pretty well
told the story, and that's why the word cancerous is often used to
describe such rusting.  It may be better to find a used hood of the same
paint color and live with any difference in color due to fading.

If it's merely a rock chip rusted from the last rain, I suggest using a
soft grinding tip on a dremel tool to grind out the spot and enlarge it
some to remove all rust - perhaps to the total size of a pencil eraser.
 Then use touch-up paint to fill the cavity.

Dave

As someone has already mentioned, once rust starts it becomes an uphill
battle.  However, if your not interested in going to all the work of
striping the paint and reapplying, then here's another option which I
have found to work quite well.

The product is called POR 15 (Paint Over Rust) http://www.por15.com/
You want to purchase the rust preventive paint.  Once applied, it is
almost impossible to remove.  This allows it to obtain a very tight
water/oxygen proof seal protecting the metal below.  Given that you
have a car which is over 11yr old, I'd say this is the best option.  It
will buy you years, it has for me.

Nick