The sandblaster would be pretty messy if you can't do it outside. Just pressure wash the engine compartment first, and then sand it after you check for the slag spurs. I usually sand with 80, then 180, then 400. Prime it with some good primer, sand it with 400 wet and clean it, and then paint it. Whether to run the crap out of the paint like the factory did in engine compartments is up to you....lol.
Sounds like a good plan, thanks for the advice. I was just starting to ponder the best method, and that seems the most feasible since I can't do it outside. I'll probably use some POR15 in those rusted areas by the master cylinder though.