Engraving is best cleaned with solvent and brushes (preferably a plastic brush, bronze brush if the rust is really hard, NEVER stainless steel brushes).
Polishing actions requires knowledge of how the action works, otherwise you can actually cause problems. For polishing actions to smooth them, use stones.
Refinishing is another story. Unless the gun is badly pitted, I usually start polishing with 150 aluminum oxide cloth, then 220 or 240 grit wet/dry paper, then 320, and final polish is with 600. Always use a sanding block. I prefer a satin finish, so I don't buff the finish. If you are going to buff the finish, the finest you will probably want to use is 320 grit, otherwise the metal will look like a mirror and any small scratch will show from a long ways away.