My buddies axle on his bike was beginning to rust, and what we did, was secure the back end of his quad off of the ground, then started the bike, and used it as it's own lathe, while sanding off the surface rust with some emery cloth. It turned out really awesome, then we sprayed it with a cheap can of clearcoat, and it has held up pretty well. The best thing is that we didn't have to tear the rear end down, just had to take off the rear tires.
Quad type with held to protect the innocent(It wasn't a shee)