I think it may depend on what the cause of rash is, because I've read and found that breastmilk can irritate baby acne. But I have heard it is fantastic for the skin and you can make soap out of it, etc. So I think for the most part it is great... but just a thought that if it is acne it may not be the best to let it dry on. Or just try it for yourself and see, each baby is different and maybe mine were just overly sensitive. We did have baby acne with both kids. Lasted from week 5-7 with first baby and weeks 3-6 with second.
Also had Roseola with first baby which is common from 9mo. - 1year olds. That rash was kind of weird because it was blotchy, flat but raised red spots that looked like they'd itch like nobody's business, but she seemed to not even notice it. And it was everywhere...down legs too!