Hi Jackrabbit - turns out I inherited a HiLo from Iowa too a couple years back. I think mine may have been more of a basket case than yours but you can certainly fix those soft spots.
How far down below the windows has it softenned? You'll find that pulling the windows isn't too bad and regular maintenance consists of making sure those seals are always good and caulk is fresh. The windows seem to be a common point of failure on these trailers from what I can tell.
The wall is a composite "sandwich" with the fiberglass outer glued to a 5mm piece of plywood, 1" thick inner foam core, then another piece of wood on the inside just under the wall paper. Here's a quick link to an album I put together on flickr (which is way way more damage than what you're talking about, but you'll see how the walls look and go together which might be helpful to you):
Keep us posted - there is a lot of great help here. The group was really helpful walking with me through the mess you see collected on Flickr there.