That's what I did when I SM2K'd a Firepower I restored and made decals for. My experience with decals (from decades of custom painting model trains) bears that decals always look best when applied to the smoothest, cleanest, glossiest surface possible. So if you feel compelled to sand between coats, make certain you polish to glass before you decal!

Once your decals are in place, you need to seal them. A light mist coat is good to make sure you don't oversaturate and/or "burn" them. You just need to lock them down beneath an overcoat that covers the entire surface area.

The next coat over the mist will infill and bring back the smooth gloss.

At minimum you probably want two normal coats over the decal sealing mist, so that any polishing does not rub through into and remove part of the decal.

I appreciate it too, although I'm not sure I should ha ha. Sounds like despite my best / reasonable precautions and PPE and prep for using this stuff and KBS DFC in the past, I'm probably gonna get cancer even sooner than I suspected. Ignorance might have been bliss!

It's a shame this stuff has to be so muddied and confusing. It seems almost deliberate! Like the average joe has a degree in biochemistry to decipher the legalese. When so many other "experts" seem to offer conflicting advice.

And while it's easy for someone with a full grasp of the problem to be all "you're a moron who deserves to die if you don't spend the $750 to protect yourself" - well to some extent that may be true but it's pretty tough to be suddenly faced with "What, $750 on bulky equipment I'll probably use just once for 15 minutes, to paint a game that might not even be worth that???".

So by that token finding a pro to paint it would be a bargain! Except I'd tried previously on multiple occasions to find a local auto guy to do it, none turned up. And the Pinside-pros are all backed up and charge that same $750 or more, nevermind shipping and such. So it well and truly sucks for the hobbyist trying to restore a game on their own / on a budget.

I had great results spraying the DCF roll-on with a Wagner sprayer though. I just hated the cleanup with Xylene which was toxic as all fallout. Might have to go back to that route though, if it's the most known / manageable / least-hazardous DIY quantity / 2pac-like results.

Oh well. YOLO. Climate change will get me before the cancer does...

This. I'm not aware of any one-size-fits-all perfect color solution every time. It's a crapshoot: you have a printer that does certain colors perfectly, but is simply incapable of rendering others acceptably. Sometimes you get the "color" you want but with the sacrifice of dithering.

Lasers are traditionally far more limited, but it's not just a laser issue, because I've run into this with inkjets too. I once made custom decals in dayglo colors (yellow and orange) with an inkjet... the printed output was a perfect match to base paint I used. That printer died, I replaced it with the "next gen improvement" by the same vendor and... I could never get those colors (and fine text) to print the same way ever again.

Decals are especially difficult to color match because of their inherent translucency when using clear film. So what looks fine on white film (which is essentially paper) looks completely different on clear. Oh, and the type of printer ink affects this too. So again, the best choice for approach depends on the application... i.e, are you covering an insert, or not? Are you adding text over a complex graphic? Or replacing an entire bare area?

My recommendation from years of experience designing graphics and decals for scale models and playfields, is to figure out what color palettes your printer can handle, then scope your projects appropriately. You might have to get creative in your decal designs. I use an ALPS printer - precious unobtanium that prints white - but it also has a fairly limited color palette. There are certain jobs I simply can't do with the ALPS, and have to pursue other methods. Bottom line when it comes to color on a playfield, paint is your best friend. Save custom decals for text and keylines only if at all possible. If you need to replace sections of art things get much more complicated and can only be evaluated case by case.

I think you might be over-thinking and overworking yourself. The good news is, what you have now is recoverable.

It's true that decals need a very smooth surface to bond to, to prevent "ghosting" (or "filming" as it's called in scale modeling). But "smooth" does not mean glass-like perfection for this step! It simply means "glossy". Your 1000 grit polishing was probably well more than sufficient. I say this based on decades of scale modeling where a "spray can gloss surface with no finish sanding" has proven adequate - consider that many model surface details can't be sanded. I've used that approach with my pf decals as well.

Once applied, as long as the decal looks uniform, smooth, and clean, you're golden. Any small bubbles that might appear after a day or two, can simply be pricked with a needle to bleed out, and then blotted invisible with some fresh water or decal solvent (available from hobby shops).

Now, as for protecting and sanding the decals afterward: you need to bury them under a few layers of clear. BUT you absolutely must go with a few thin "mist" coats first, to prevent any averse reactions with the decal films or inks. Once you have a couple of those gentle locking coats down, then you go a little heavier with a uniform smooth coat on the whole pf. Then you add another layer. And then maybe another. Only THEN, after you've buried the decals, should you start sanding to level everything out. You may even discover by then that parts of the decal which originally seemed unlevel (around the inks and film edges, etc) have removed themselves as successive layers of clear self-leveled on top of them.

As for your scratches, it's nothing that another coat or two of clear won't eliminate like they were never there. That part is always like magic

If I were you I'd stop sanding right now, add a few layers of overall clear, THEN start sanding with polish grits to work everything level as needed.