Regarding the finish on the lock, I'd suggest you will probably like the final results best if you stick with a traditional finish. Browned, blued, or left in the white are all traditional. Cerakoted titanium might be out of place (a bit like "lipstick on a pig", as the expression goes).
Be really careful with the Dremel. You can use it on tight spots, but I'd avoid using it on any flat spots. Best to use a piece of hardwood wrapped in emery paper. (I use wet-dry sandpaper, such as is used in auto body repair. I buy it at the auto parts store.) Much more controllable. Dremel can get out of control very quickly and make divots.
320 and 400 grit if you plan to brown or blue it. Go to 600 if you plan to leave it in the white.
With the sandpaper, I lubricate it with mineral oil. I just use Norton's oil sold for use when sharpening knives. It catches the slurry quite well--better than water, in my opinion. I do not do it dry. Wet-dry paper is designed to build up a slurry. Also, if you can smell the metal dust, you are breathing metal dust. Using the oil helps keep the dust under control. (I wear a dust mask when polishing, as well.)