Doc,
There are various degrees you can go to with this job. There is a product that is made specifically for whitegoods. I can't remember its name, but it'll jump out at you when you look at Bunnings. Wet and dry is good for the initial sanding. Here's what I'd do:
1. Sand back any rusty areas until the surface is flat with a coarse grade of wet and dry. At this stage, using it dry on an orbital sander would be fine. There is no need to remove sound paint back to bare metal, but make sure there are no distinct edges where the old paint meets metal. It should be a smooth transition.
2. Clean the surface completely free of dust with metho or paint thinner.
3. Apply rust converter to any spot rust still visible. Wait until it turns black and dries completely then fill any spots with automotive putty (bog).
4. Sand wet (using a block) any puttied areas.
5. Prime the entire section you are going to paint with the primer recommended for the paint you are going to use.
6. Lightly sand the primer with wet, fine grade wet and dry (1200 or so).
7. Paint. You could use the cans of fridge enamel/whitegoods paint, but why not spruce it up a bit with automotive paint? There is a huge range of touch-up paints. If you see a car colour you like, chances are you can get a can of spray enamel to match it.
8. Once the paint is 100% dry and cured (couple of days), buff. Either with very fine wet and dry (2400 or so) or with enamel cutting compound, a soft rag and water.
9. Polish.
Main things to look out for:
Appropriate primer for both the existing paint and the new paint.
Clean solvent free and dust free surfaces before anyting goes on.
Apply several thin coats rather than one thick coat.
Make sure you treat the rust spots.
Don't leave bare metal exposed for too long or it'll rust.
