I have to agree with Mike here. I use a random orbital with a vacuum attachment. This is key in my opinion. The strong vacuum (I use a 1 Hp dust collector) helps to keep the paper clean. Change the paper often - sandpaper is relatively cheep compared to time and frustration.

I don't like to use anything less than 100 with the random orbital. Drop in small increments.

Water seems to work well with the soft woods and sunlight beats any bulb made for finding imperfections.

That being said, again I agree with other posters that you have to let it go. I actually had one customer tell me he loved an imperfection that I wanted to sand out. He thought it made the canoe look more "hand made". Go figure.

Stephan