Annapolis,
I just went thru this process as well! In fact my keel was painted the same blue color so when I saw your pic it was like a slight nightmare back to where I started several months ago. Don't worry though, you will get thru it.
Folks may have already mentioned this, but here is what worked for me! On the 'Harbor Freight Tools' website I bought a 4.5" angle grinder for $25 (it is the Chicago model with the paddle switch, also google coupon codes for HF and use the best one). It is now my favorite tool and well worth the $. The also sell a set of wire cup, wheel brushes for $10 which fit this grinder (1 of these cup brushes at Home Depot is $17 and I smoked it in an hour...not worth it...get the set from HF or just the flap wheel). At Home Depot or Ace they sell a '40 grit grinding flap wheel'. At HD the brand is 'Diablo' and cost $7, Ace brand was ~$5. Both worked VERY well, much better and faster than the wire cup. The wire cup brushes will work for the final surface clean up and rust removal / polish before coating but not strong enough for the heavy corrosion and paint removal. The angle grinder is geared much more powerful for things like this as compared to a drill or disc sander.
It took me a solid day and a half but I was able to clean my keel back to bare metal. Make sure to have goggles, a respirator, ear plugs, gloves and a hat which covers your ears. The dust gets everywhere!
Coating and sealing: once all rust and paint is gone wipe keel clean with thinner or another similar solvent. I then painted my keel with Interlux, Interprotect 2000E, first layer thinned approx 30% with their 216 thinner and 4 more coats at regular viscosity. I used this on the entire below water surface but you can just use it on the keel. Interlux tech support can answer questions and steer you with how to use this product.
Good luck and feel free to shoot me a note with any questions!
Sail on,
Joe