There is most likely a strip of metal extending from the lower bearing, along the middle of the skeg, extending to some point past the stern tube. The lower rudder bearing needs support and it would not be solely fiberglass.
It would appear that the skeg may have hit bottom at some point and cracked. The rust appears to be combination of a leak from the bilge and corrosion from the lower bearing support bar.
In any case, it's time for excavation to expose the support bar and completely grind out any cracks. Clean up any steel corrosion, then reglass. If the support bar is severely corroded you could just weld another bar to bridge the bad spot. I don't see this turning into a huge project but it should definitely be repaired.