Wetsanding Vallejo

Vallejo doesn't sand well. It's well documented at armorama.

I'll second Nathan's note.  Vallejo really doesn't sand too well.  It can peel off in rubbery sheets, and their clearcoat is very easy to work through accidentally.  Up to you, personally I would not do it unless I had to (correcting a flaw).  I've used Vallejo for a while now, and while I like their paints to a degree, they don't take remedial work all that well.

I would practice on a scrap piece painted with Vallejo first. Some Acrylics just don't sand well at all. They are rubbery and won't feather out for s&*%.

You should be fine as long as the paint is fully cured and not just dry to the touch. Many (but not all) acrylic paints work this way. The film former/binder is water soluble in the bottle. But during the curing process, the polymers will cross-link and because of that, the film will no longer be water soluble (this doesn't mean that it is water resistant, just not water soluble). It doesn't matter what you thin it with, whatever solvent you add will evaporate before curing.

That's one difference between water acrylics and lacquers. Lacquers, such as Alclad II, do not cure. Thus they remain eternally soluble in their original solvent. That feature of lacquers has its advantages--it makes lacquer finishes easier to repair.

I'm not a regular Vallejo user, so I can't say this holds true for that brand of paint as I've never wet sanded it. But it is very likely to be safe. If you are really worried, paint some scrap plastic to experiment on.