I believe I may have used a similar product on my PRR layout. It was a Medium Rust from Bargdon Enterprises and came in a rectangular plastic bottle. I airbrushed my track flat black first, per the instructions, then tried a couple of methods, first by brushing it on the rail sides and tie plates with a stiff small brush. It applied well and after vaccmning up the excess, it was very visible, but the powder also scattered over and between the ties. I used Q-tips in alcohol to wash off the excess on and inbetween the ties(lots of work...learn as ya go), as well as the plate tops and it left a much nicer darker rust finish and removed the loose rust. It does stick well when brushed, but is very messy, so I was glad I did mine before ballasting. I did try a different method of application that proved to be noteworthy. I mixed the powder with some 70% alcohol and painted it on, then brushed it in to the rail. When painted, it was a bright orange and the brushing dulled it up to the finish I wanted and left much less of a mess on the ties. I will be using this method for the other half of my layout.
During the clean up of the ties and rails, only the loose rust came off and I was applying good pressure, so the powder does actually stick well to the rails and doesn't wash off easily.