I gave up on using straight paper to remove paint very early on. Chemical stripper is not a bad option - tho this'll take you right back to metal. I did most of my car with a random-orbital sander and 60 or 80 grit pads.
Re point 6 - my own recent experience is that you'll need to do this wet - dry just clogs the paper in seconds. Trick on that final blocking is to give it enough to give you a really smooth surface for the colour without going through to the etch or metal. Takes a bit of trail and error and some swearing when it goes wrong.
Gathering you are talking about a complete respray - you need to put 3-5 coats of clear on immediately after the colour. Otherwise sounds about right.
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