1. Id powder coat the wheels. 2. Its a great option, I do not know of any places in denver, maybe someone else can chime in. 3. I wouldnt paint them as a long term repair and yes you can sand blast them first but if someone is doing powder coating they will prep them first in likely the same way. 4. I would lean towards a dremel not doing the job (no pics) and second a dremel doesnt add metal it takes more off which the curb has already accomplished for you. There are plenty of mobile wheel repair guys (gals) in the country and I assume in your area that can repair such things as bends and curb rash for a reasonable cost. 5. I've had wheels both painted and powder coated I prefer the second option.
Hope this helps.
" I told my son, you have to catch the football other wise this just looks like child abuse." - My brother