See /forums/p/12406/111923.aspx#111923 for some suggestions.
I've had some success with using a Q-Tip moistened with Goo Gone to smooth out lines like this as long as they weren't too pronounced and the paint not fully cured, although I've only tried this with acrylic paints. Otherwise, wet-sanding with a fine grit sanding stick is probably the most commonly suggested technique.
I use those swizzlestick-type sanding sticks a lot since I can sand very small areas without too much overlap onto the adjacent areas I don't want sanded, and they come in a variety of grits with a finer and rougher grit on either side of the stick. They don't hold up too long for wet-sanding though...the sanding surface tends to detach from the stick, although this is easily fixed with some super glue.
Best thing is to heed the advice about painting in light coats and removing the masking as soon as the paint is dry (but not cured) to avoid paint lines in the first place. Also, you'd find you have a lot more control over the paint if you used an airbrush versus rattlecans.
There are lots of threads for how to achieve a soft demarcation line when painting camo schemes too. Try a search based on "soft camo lines" in this forum.