I've used EvapoRust in a Model A block on the bench to dissolve rust. I left it in there several weeks. Unlike Ospho, EvapRust dissolves rust into solution rather than converting it to a solid.
In answer to your question whether Ospho would prevent rust, the answer is no. It just converts existing rust, it does nothing to prevent rust.
As I've just studied the specs and characteristics and functions of Ospho here: http://www.ospho.com/ it appears that it just converts existing rust into some non-rust solid. Although they call it a coating, the only coating that it would seem to do would be the coating of rust converted to something else. If there was no rust - no coating. It is described as a pre-treatment of metal before priming for painting which I don't think anyone would recommend for the inside of an engine. Since it's not really a coating but just a rust converter it's not likely to flake off inside the engine and become a problem so couldn't hurt anything to apply to the water passages to eliminate rust that's already there. As far as preventing future rust,I don't know why the non-rust solid that it creates would not rust again. The product information does not suggest any such benefit. So, it does not appear to have any rust preventative properties.
Ospho has phosphoric acid and some form of resin to hold it on the surface. It will dilute with water to where the resin won't stick but you can buy preparatory phosphoric acid solutions that don't have the resin if you want a naval jelly type of rust remover without the jelly. Phoshoric will convert iron oxide to iron phosphate but it will also derust if you leave it on the surface long enough. They are not good for a flush though. The stuff will deteriorate the water pumps and thin metal in the radiator.
Mild acetic acid will also derust and can be used as a flush if you are careful with it. Vinegar is a mild form of acetic acid that is most commonly used. Molasses will turn into acetic acid as it sours and has also been used as a derusting compound. Stinks like hell though.