Here's a list of what I would need to touch up a frame:
Stiff wire brush to remove rust
Anti-rust product (optional)
Wet or dry paper
Primer (those little tins of Humbrol will do)
Time and patience
Obviously if you are collecting this stuff from a standing start, it is going to cost you about half of what it would cost to just take the frame down the powder-coaters, so why bother? But on the other hand AFAICT the paint on your frame is 90% sound... so why blast it off? But then again, the powder-coat is going to be a much tougher finish than your patches of Humbrol... which could be an advantage if you are planning to be careless.
I don't understand spray-painting a bike frame. I can't see how it would be possible (for me...YMMV) to actually get more than about 20% of the paint on the frame. Where does the rest of it end up?
This is the world we (try to) live in... It makes more sense economically to subject your frame to a 100% blast and re-finish, than it does to take the time and trouble to touch up the perhaps less than 1% of your frame that actually needs attention.
Pretty much as above. That is really a minor paint issue, the top of the seat post being the worst. Get the area as clean as you can and either humbrol or nail varnish, with some good brush work you'll never know