I wouldn't paint over any rust with POR-15 or any other paint or hard cure coating type of product. I've tried it several times with various products , including POR-15 and undercoating sprays, and over time it made things worse. If you clean off all of the rust, sand blast or acid wash, sand and prime the surface with a good quality zinc rich primer and top coat with POR-15 you'll have a fairly good rust resistant surface.
Currently I've been occasionally spraying the frame and rusty under parts on my used 98 4runner with corrosion x, corrosion x heavy duty and or max wax and it definitely slows down the corrosion process. I bought the 4runner with 126,000 mi. on it and wish the previous owners had done something similar.
http://www.corrosionx.com/
I've read that used motor oil will tend to attract moisture so it's not the best choice for rust protection, I wouldn't use the linseed oil either.