I didn't really want to make rusty iron an available option for weapon sets for the same reason I didn't make it an option for shields - it screws the cost-to-breakability balance.
For hunters, you can bring some wood (if none is on the map) and make ranged weapons out of that. Otherwise, bring and slaughter some cheap animals and make those out of bone. Both are cheaper options that stay within the mod's balance.
As for trade balance, I agree that enough spam can override it in practice, but I had to fair out the product values with the required amount of labor somehow. I wish I could edit item trade values directly, but that's just not an option, unfortunately. So right now it's simply balanced along the lines of "how much more metal bars the modded items take compared to vanilla counterparts?"
It also ties into the whole gamey abstraction thing going on in the mod. I'm not as set on the simulation aspect as Toady is, so the physically outrageous amounts of bars (compared to vanilla, and what a metal bar is supposed to represent in it) - and, by extention, their trade values - are not meant to be taken literally (e.g. "a wrought iron ingot is more valuable than a gold ingot"), but rather as an abstraction of the required labor, tools, measures and future maintenance for the end product(s) these bars are made into.
With mild steel specifically, its role in the Full Edition is a placeholder for now. I just arbitrarily made it cheaper, because it became kinda useless. I'll probably try to find some new and reasonable implementation for it in the future and rebalance the values and creation process along with that.