There is really no point to sanding the scratch prior to touching up. What is really critical is to get the scratch cleaned out so the new paint is sticking to paint and not paint chips or dirt.
Apply a small amount of piant at a time - do not use the brush supplied in the bottle! I have used anything from toothpicks, to torn paper match sticks, the idea is to let the paint "flow" into the repair so it fills all the crevises and gets a good hold. It should take more than one pass with each allowed to dry fully between applications. I don't usually put any clear over it but some of my cohorts swear it's necessary.
Do three or four passes until the repair is built over the top of the factory paint. Then wet sand the raised repair down to the original paint's level. You'll have a hard time finding it after that. The less paint you apply with each pass and therefor, the more passes you make. the better the repair will end up looking. Like Slapsht said, 1500, and then 2000 grit, of course tape off a small area around it so you don't end up having to buff out stray scratched from the paper.
You really can't hurt anything unless you really bear down on the paper or sand through an edge. It may take a little while to get all the sanding marks out but they won't be deep and you'll do fine with some Meguiar's or 3M over the counter polish, be diligent and patient. If all else fails a detailer can wipe the 2000 grit marks off in a matter of seconds - and I never would have charged for something like that but it'll be super cheap if they do, less than $5 I'm sure.
Unfortunately, if you are like me, you'll end up having to clay bar, buff, glaze, and wax the entire car because you can't stand the very slight difference the polishing makes around the repair! You can remove the tape while you're buffing the small area by hand and feather the "polished effect" out. I've done that but then I ended up doing it all anyway because I felt like I cheated. Ya, I'm a little anal...
