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How would you approach repairing this kind of water damage, pictured, without reinstalling the stone tile? I think I've fixed the source of the water damage above.

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I was thinking that I would scrape/chisel out the old drywall compound, remove a section of the rusty outside corner bead, apply regular joint compound, add a new section of corner bead, then rebuild the corner with regular joint compound, sand, more joint compound, sand, prime, and paint. When I'm done, I'm sure it will look terrible. Any tips to make this go easier and better?

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I see no need to get into the tile here. I would just do a light scrape, then sand it down. Seal it with a stain-blocking primer, then do any drywall repair. Prime it again and paint.

Replacing part of the bead with plastic could help prevent further rust if you're unable to rectify the water issue. Surgically remove a section of the metal bead using a rotary tool and cutoff wheel. Cut and fit a section of plastic bead. I wouldn't rely on joint compound alone. It'll be too fragile.

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