Ed,
The best I was ever able to do with LustreKote was a tack coat and then a full flow coat. Since the spray can (we are talking about using spray cans, right?) won't allow you to thin, that's the way to keep the weight down. I did follow the general advise of warming the can in hot water and shaking far more than you normally would with other spray cans.
I have sprayed trim colors into a jar, thinned with xylene, and airbrushed with it. That allows a multi-coat method, but still not what the paint seems suited for.
I had the same experience that Randy noted with crazing and cracking. I tried nitrate dope undercoat, rattle can primer, etc. Mine was kind of rubbery for a week or so so I cured it in the So Cal sun. Then it was fine for maybe a year. Then the surface softened on the fuselage, got gummy and leached color. The plane was cleaned after each trip using Windex. Maybe it doesn't like Windwx? In other places on the fuselage and wing trim it started turning black (this was red paint) and cracking.
I don't know how color sanding would work out--you might have to wait a long time. And, it just doesn't seem to fit the basic material and approach. You might discover otherwise.
For a simple paintjob on a plane that might last a year or so, it can do the job. For the effort, it looked quite good when new. Like most, I have moved on to other alternatives.