If you are going to spend the money to fix it up and keep the trailer might as well strip it completely (IMHO) and have a good quality paint job done. It can last a long time, however prep work is hugely important to any good paint job.
As far as going to 17.5" singles check your weight rating on the them, they may be rated for more weight, but might not be equal or more than the 16" duels your running now. Kumho makes a "J" rated 17.5 rated at 6005lb per wheel (single) pricy though. Singles pull amazing compared the duels though on the highway.
Kronic