In Vince's great writeup on rebuilding injectors he places sandpaper on glass and laps surfaces. Is that water on top of the sandpaper? Help me out here - I want to get this one right! BTW - this is a great site for learning!
Welcome to the site!
It's a generic light oil... probably some 5W30 from my gasser days.

As the instructions say... the "proper" tool is a precision microtome or a very fine green lapping block. Sandpaper is kinda cheating, so the trick is to do as little as needed after having a close look at how out-of-whack the surfaces are.
I've had good luck using those peel and stick sanding discs. They stick quite nicely to a sheet of glass.
About the only thing I do differently than Vince is the motion used for lapping. I use a figure 8 motion and rotate the part 90° every couple seconds. This method seems to virtually eliminate any chance of wearing the part unevenly.
I've had good luck using those peel and stick sanding discs. They stick quite nicely to a sheet of glass.
About the only thing I do differently than Vince is the motion used for lapping. I use a figure 8 motion and rotate the part 90° every couple seconds. This method seems to virtually eliminate any chance of wearing the part unevenly. 
The only thing there though is that can you get them in a 400-600 grit or finer and are they the wet or dry style and hold up to the oil very good?
i ALWAYS use oil with wet dry for fine sanding like injector internals.
ALWAYS...
wet dry i would say is re-usable. The grit obviously goes down after exended use but used correctly and carefully it can last a very long time. escpecially tapped to a piece of glass.