Ok.. we are now in the middle of a game and we have just run into a rules question that.. well.. makes us question how we have been playing this along!

Rule 6.5.8 Purchase Trains

"If a company has fewer Trains then the current limit, then it may purchase a Train." ---so--- If the train limit is 3, and a Public company has 3 trains, does that mean that the Public Company can NOT buy a train until one of its trains rusts?

(I know you could sell one of them, but lets assume for this example that this is the only company you have.... and it's at least phase 5.)

Question Two:

"... Otherwise the Train may be any from the Bank Pool, or the cheapest new Train in the Bank; the price paid must be the face value."

Does this mean that if there is a 2 train for sale in the Bank, then the Company is forced to buy that 2 train, even if it has enough money for a much higher train?

This may not be the most clear explanation but here goes

Question 1

That is correct and you cannot sell a train at this stage even if you have another company, the sale has to take place on the buying companies turn.

Question 2

You need to differentiate between the bank pool and the bank. You can always buy any used train available in the pool as an alternative to buying from the bank, but the new trains in the bank must be bought in order so all the 2 trains must be bought before the first 3 train is available, then all the 3s before the first 4 and so on. Note that the trains available from the bank will always be at least as expensive as any in the pool

So... you can't but a new train if you have your limit. So, if you only have one company, you can't sell any and thus are dead in the water till someone buys a high enough train to rust yours. However, this means that if you have 2 trains, the company is dead, as you can't do anything till some buys a 4 train and puts you out of business?

Correct. You cannot purchase another train if you are at the limit. You must wait for one of your trains to rust or
You must wait for another player to offer (and you agree) to purchase one of your trains or
You must wait for one of your other companies to buy one of your trains across (which you stated was not possible in the original question since you are the president of only one company).
Note that this means that if you own a T3, T4, & T5 and there is a T6 now available, you cannot purchase the T6 even though it would rust your own T3.
Also note that technically you do not "sell" trains (on the owning company's turn) but rather "buy" them. Not trying to be grammar jerk, but it is important to note that the current company may only buy not sell.
(I am probably not explaining this last piece well but am sure that somebody will jump in to clarify).

Part 2: In phase 5 there are no T2s available as they all rusted and were removed from the game in phase 4.

If you only have T2s then they will rust when the first T4 is purchased. Public companies will not "go out of business" when this happens. Unless they do not have enough cash to purchase a train when their next turn takes place. (Note that public companies can take out 5 loans $225 to assist with the purchase of a train).
Minor companies that only have T2s are sucked in the RSR when the first T4 is purchased (unless of course, they are the one making the first T4 purchase).

So.. what about the lvl of train? If there are 2s available, then they all have to be bought before a 3 train can be bought?

If there are T2s available from the bank then, yes they must all be purchased prior to any T3s become available from the bank).

The bank pool; however, is a different story. If there was a T2 available in the bank pool that would not prevent you from purchasing an available T3 from the bank. But I am not sure that there is even a theoretical way for a T2 to be in the bank pool. Now if you were talking about T4s and T5s, the question might be more relevant.

Note that the owner of the public company whose trains have all just rusted may voluntarily nationalize the public company into the RSR.

In regard to the preceding questions:

Let's imagine that someone just bought a T6, rusting the T3s and reducing the train limit to 2.

Company A finds itself with T5, T4, T4 and must discard the T4 to the bank pool.

Company B finds itself with no trains. The president decides not to nationalize it. On Company B's next operating round, the president may buy a train from another company, OR the T4 from the bank pool OR the cheapest train in the bank (probably a T6 or T7).

It's theoretically possible by way of a three-or-more-way merger of minors owning five or more T2s and T3s. Such a move is so far removed from any merger that's happened in any game I've played that I would not care to speculate as to whether or not it would be a good move for any of the parties involved (my limited experience would suggest "no", but we don't tend to see a lot of majors with T2s).

All this would have been much clearer if the Bank Pool had instead been called Honest Ivan's Second-Hand Train Emporium.