refinishing cedar panelling

I've got the typical tongue/groove aromatic cedar panelling on the ceiling, and one wall in my bathroom. Of course the wall they chose has to be the one behind the sink and toilet :(
I had an ice dam last year that found its way into the house via the opening for the bathroom fan (it was the fan that caused the dam...arg). Needless to say the water came in and found its way from under the cedar planks between a few joints. This has left somewhat noticeable water "stains" on the cedar, along with slashed soap and cleaning chemicals have "spotted" the cedar behind the toilet and sink.
Are there any easy remedies? Can I use an oil product (the wood looks dry) that will bring back the luster of the wood and reduce or remove the staining? The wood is in mint condition...its just aesthetics.
I'm adverse to replacing the wood at this point. I'm actually quite tempted to just "cover up the problem" by painting the wood the same colour as the rest of the walls. Is there a better way? Will light sanding with a very fine paper take out the stains without changing the entire color of that spot, making the problem worse?
any other ideas on how to minimize or eliminate the stains?? your help is appreciated.
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