Oh, the dreaded plunge scratches. This is a major PITA of me! Someone (Bruce maybe?) posted a trick a good while back that I've started using with good success. I took a palm sander (with a rectangular bottom plate, not one of the mouse shaped ones), removed the rubber contact pad on the work surface, and cut and machined a piece of micarta to fit the plate and epoxied it in place. The micarta has two edges that are ground on the belt grinder to match my typical plunge radius (if you can't match then perfectly, make the corner a bit sharper than your plunge so you can get in there). I matched the plunges by taking one of my knives, and checking the micarta to the plunge with each pass.
Once the epoxy is all set up, take the sander and mount it upside down in a sturdy vice. I wrap a towel around the sander to dampen some of the vibrations, and then clamp it down snug in the vice. Careful when you turn it on; if it's not tight, it will worm it's way out of the vice. Anyway, take some el cheapo spray adhesive and stick a 400 grit piece of paper to the micarta, wrapping over the edge that is ground to fit your plunge. Then turn the sander on, and place the knife on the micarta, and push the plunge up to the shaped corner to work out the scratches. It will swirl up your blade real good, so don't work too high in grits before you get the plunge cleaned up. Make sure you remove your paper after each time you use it so the spray adhesive doesn't permanently set up. It will eat through paper really fast at the plunge, so you can just pull up and re-stick your paper several times to get fresh paper on the plunge.
Once the plunge is clean, I use the leather cushioned sanding stick and place the corner of it in the plunge. Rotate it into the plunge with a twisting motion of the stick (from wrists flexed to extended), and this will get your scratch pattern to match the rest of the blade.
Good luck. Other people also use dowels or pin stock of the same radius as the plunge and work it to remove scratches.
--nathan
