gun,
As far as thinning goes, I've gotten mixed info here. The first 15 coats were thinned 2:1. Two parts laqcuer, one part thinner. That one part of thinner was actually 50% thinner and 50% retarder. Still, you can thin with retarder only if you wanted to. The last 10 coats were was 1:1 with the same split of thinner/retarder.
Coming out of the gun, the thinner still had plenty of body and in all of those coats, I had two small runs. The runs were almost invisible and all but disappeared when that coat dried.
As for the sanding and polishing goes...
1) The body MUST be leveled before even the sealer coats. Then level after the sealer.
2) I sprayed about 15 coats before sanding the clear. Nitro melts into the previous coat so I don't see the point in sanding after EVERY coat.
3) I did all my leveling (before the final sand and polish) with 400 grit paper and mineral spirits. Wet the paper with spirits and begin sanding. Use a block on the top and back. Every 15 - 20 strokes, I'd wipe the slurry off the guitar with a paper towel and examine the body. You're done when the shiny spots are gone and the entire surface looks absolutely uniform. Remember, if you can see any inconsistency in the body at this point, it will only be magnified later.
4) After the final clear coats were ready, I wet sanded/leveled starting with 1000 grit. Anything coarser has too much cut and is really unnecessary if you've leveled properly before. Again, you're looking for uniformity in the surface before moving on to 1200, 1500 and 2000. If you still see any scratches after sanding with a particular grit, go back to the previous grit. This is the key. If you don't have the discipline to do it over when necessary, you'll have problems later.
5) Lastly, I can't stress enough, how important it is that you have clean cotton rags to work with. I trapped some debris under my rag while buffing off the compound and created scratches. I had to go back to 2000 grit paper to take them out.
These are all points that became important to me during this process. I'm sure I have alot to learn yet and others have had different experiences but this is what works for me.
Good luck!
Dave