Hard to say just how bad it is until you expose everything. Replacing the quarter is a lot of work, so I'd generally only do it if you deem that quarter to be unsalvageable.
The good news is that unlike a lot of newer cars, there is quite a bit of access to that area of the car from the inside. Take off the tail light and remove the interior plastic from the inner quarter, then take a look. If it's dented, then you have to decide if your skill level is going to allow you to pull that quarter back out enough to skim it with some filler and repaint, or if it is too far gone.
Rust is an issue, but you should have a better view of that once you have stripped the panel.