Any bike that old likely needs to come completely apart for a thorough cleaning and relube at the very least.
I like the idea of just polishing off the rust a bit and giving it a coat of clear gloss. It'll preserve the decals and original paint. I'm not sure if Krylon is the best or not, some rattle can clear paints will yellow with age. I've used clear lacquer in the past but not from a rattle can, as well as Dupont auto finish from the paint shop, which I normally have around the garage anyhow.
I wouldn't worry about soaking the whole frame unless you open things up and find its a rusty mess inside. chances are you just have a few rusty scratches that need to be addressed.
You could spot clean the rusty spots with some Evaporust, then polish the original paint up as best you can with some light polish but saving the decals is tough when trying to get gloss back out of old paint like that, especially if its pinstriped. The clean and clear method may be your best option to preserve the decals and any pinstripes.