heres what i do and if nick gets his pic of the scoop up here you can see...
i use 320 grit and get it smooth
whatever primer that adheres to the kind of surface you are doing i.e: plastic, fiberglass, metal. rust-oleum would be fine
you can sand down again with 320 grit and then primer again, any more than that you'll be wasting your time
sanding in between your color coats? i have never done that and never had a problem
if you feel the paint isnt smooth enough then wet sand with 2000, and apply again
you can let the coats cure for a few hours, dont have to wait days, then start putting the clear on
again if you think the paint is not smooth or have some run, wet sand with 2000 and apply clear again BUT wayy lighter
here are my wheels i painted



best pics i could fine, they are on the car right now, dont know if you noticed or not when i passed you this morning