Joel, please do me a favour and remove the flanelette cloth from the work area. I can see it getting involved in the belt and start whipping around your head, picking up tools and parts like a cyclone before you can reach the switch to turn it off.
A belt grinder is one of my most useful power tools as well. Mine is a 6" x 48" with a solid back and a shelf, and a 10" disc on the end of the motor. For removing file or saw marks, shaping metal, sharpening, it is indispensable. I occasionally use the back which is traveling upwards, as a slack sander. A 1" sander like yours will do a lot of work. You might consider building a plate for backing the belt...think it's called a patten. Then you can grind square and flat.