This guide is very informative. Though you won't use everything in it, it will help you decide what's best for your application. Also a link of tools used with a Dremmel and two other great links.
Caswell's Buff Guide
Dremmel Tools
Metal Polishing 101
Meat Heads Instructional
I personally use mainly air tools for polishing. I use a straight and angled die-grinders. Angled for surface preparation and the straight for polishing small area's. I use the 3M Scotch-brite roloc disks. They come in 1" to 4" diameters and you need to buy the adapter plate. Then these things just thread on and off. They have any grit sandpaper for these things as well as the scotch-brite pads. Generally the scotch-brite brown coarse disks will remove really deep castings without gouging the aluminum. Then you can use the finer grades to get the metal really smooth. Another cool things is you can buy the 1" adapter plate and use the 2" disks, cut the outer edge of the disk toward the center to make them really flexible for getting into small grooves. What you can't get with this can be done with a dremmel and cotton wheels. For anything that's flat I always use an electric palm sander starting from around 150 grit to 300 depending on the roughness of the surface. Do all your sanding wet, get a little spray bottle. Then I will go to around 400 and last around 600 grit. Some people go even finer, I just let my polishing wheel do a little more work. Last but not least you will need a bench grinder or a buffing machine. The more power, the bigger the wheel you can use and the faster the polishing will be. Also dependent on the size of item you are polishing. I specifically use 12'' cotton wheels on my buffing machine. Some are more flexible and some are thicker.
This is by no means the end all information to polishing. It's just what works for me. Good luck, hope this helps and any questions feel free to ask and any recommendations are always welcome.