Hi Ed-
I think I'd try block sanding with 2000 wet paper and see how it cuts. If you feel you are sanding forever with little results, try 1500. Obviously, once you have cut through the color coat you are cooked, so better to be on the safe side, and test a small area. 2000 and 1500 can be buffed out, too, so you may find that after the sanding you can polish it up without the clear. If your car's finish is a metallic, the test area is important because metallics are not meant to be sanded. When they are, it cuts into the little metallic flakes and can change the appearance of the paint when compared to the original. It is a no-no on new paint jobs, but may not be objectionable on your driver, especially if the metallic is a finer (smaller flakes) one.
The clear I am referring to is the modern "clear coat" in a base coat/clear coat paint system. It must be applied with a spray gun, and careful attention must be paid to masking areas not to be covered, and cleaning of the sanded surface before application. Clear is nasty stuff, health wise, and rather aggressive on undercoat. Again, a test is recommended to insure that it is safe over your original finish. If you don't feel comfortable getting into all that, you might be better off passing on that route. If you want to give it a shot, choose the least aggressive clear and thin it about 10%.
I would be inclined to try the sanding and buffing/polishing method first. It might work fine, and you will not have caused any problems. Just proceed with caution and a light touch, and allow it some time to see if has solved your problem, as you did with the rubbing compound.
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