When I got my first of three WSM's I decided I was going to learn it the way it was designed to be used, with water. That lasted about 4 or 5 cooks. The I moved on to sand in the pan, that lasted probably about two years. From there I went to the terra cotta pan inside the water pan (and still use that in my 18 1/2's) but in my 22 I have settled on no water, no sand, no terra cotta pan, I use just an empty foiled water pan and control my temps on the way up and really haven't looked back. I found no distinct advantage to any method over the empty foiled pan so why bother...
As far as the rust on the charcoal grate, I wouldn't worry about it, just brush it off and if it's too bad just go buy another one, they're fairly cheap.
Good Talkin' With You
22 1/2" WSM
2 18 1/2" WSM's
Pitmaster iQue 110
Weber 22 1/2" Kettle
Weber Smokey Joe Platinum
Weber Genesis Gasser
Treasurer, Great Lakes BBQ Association
Member Rubbed, Smoked and Sauced BBQ Team