LOL, Greg. You just figured it out!! That's pretty much what I do- fill a container with water, get a cold beverage and then begin to shape/flatten the dried puttied with sharp edge (#11 blade) so that there is very little material to actually sand/polish. One I remove the bulk of the dried putty with the knife edge, I use ever finer grades of sandpapers (starting at 600) until I wind up polishing the plastic with 2000-grit Tamiya polishing paper. Dip the paper and work, rinse the clogged crud out of the paper and repeat as necessary, always keeping the work wet.
I don't spend too much time with any one grade unless the problem really requires a heavy grinding (for which I'd use a Dremel) but rather work through the series in fairly quick order.
The real trick is make the parts align as best as possible and then mask off the seam so that I wind up leaving as thin a line of putty as I can get away with so that cleanup is minimal. (if you look back a few pages you'll see this on the leading edge seam of the main wings)
Also, as I get into the fine grades, I use a circular motion instead of back-n-forth motion where possible as I'm not sanding the surface anymore but trying to polish out the scratches from the coarser grits.
Once all that's done, I follow up with a super-soft cotton cloth (worn out Tshirt) and vigorously polish the bejeebus out of the plastic until it shines.
it sounds like a lot of work (and it can be on a large 1/32 model) but it actually gets done fairly quickly once you get the hang of it.
hope this helps!