Once I sand off the rust, how do I protect the shaft? Do I need to add an sort of polish or clear lacquer?
As for NoOne's query:
The reason I am asking is that, if your only goal is to make less of the shaft stick up through the CP, a much easier route...[snip!]
My goal is this... I have a "special" and rare joystick shaft that fits exactly in a Wico arcade joystick base. The only problem is that the "small" end of the metal shaft is about an inch too short, so it doesn't go in far enough for me to be able to put the plastic spacer and "E" clip on it.
Lathing off about an inch of metal would allow it to slide in deeper and then all would be perfect.
What's so special about this joystick? I can't say until I complete my control panel.

I only have one of these right now and I need to locate a second... and as I mentioned, they are very rare, so the last thing I want is dozens of people on AC bidding up these rare Ebay listings :-)
I promise though, once I complete this part of my project, I'll document it on a website so others can use my idea.
~Ray B.