Ed, I'd sure encourage some sanding and recoating, I think you'd be pleasantly surprised by the result. I'd consider 800 as a beginning of polishing steps, but would probably start at 400 or even 320 were I trying to flatten a finish. Jay nailed it as to why sand between coats. The more you spray without flattening between coats, the hills and valleys get farther apart depth wise and the finish gets bumpy. The finish target you showed earlier was almost certainly done that way. You should be able to get a nice, flat, reflective surface.
One thing that will make it easier to sand without sanding through edges is a hard flat sanding block. You don't want the block to follow the contours of the finish, rather you're trying to "plane" the tops of the hills. I have a couple of these;http://www.mohawk-finishing.com/catalog_browse.asp?ictNbr=565
My air sanders have hard pads too, but you can do the same thing with hand sanding and elbow grease.
Unless Target has some mil thickness limit, you can keep going sand, spray, sand, spray etc. You could conceivably fill the grain this way but it would take a while and you would want some fairly long wait times between or there's risk of having the finish shrink back over time, at least with finishes I'm accustomed to.
By the way, too thin of coats usually just make orange peel and build more slowly. Ideally you want wet coats that are on the verge of sagging for best finish flow out, but that's a "feel" kind of thing you gain as you spray more, so stay in your comfort zone, I guess.