I don't sand stocks to 600 grit, but sometimes go as far as 400. But the inlay needs a higher finer polish than 400. 400 grit is fine for the engraving to be laid out on and cut, and then re-polished again with 400, 600, as high as you wish. The surrounding wood will get polished with the inlay, but it doesn't hurt it. Use a hard rubber backer, and if the wood gets stained around the inlay from the sanding, a white artist's eraser will remove most of it. The rest will be covered by the ferric nitrate treatment.