sanding drywall mistake

Sure, sand away. Use sandpaper wrapped around a scrap piece of 2x4 or one of those rubber type sanding blocks to get a more evenly flat surface. You will probably have to do some more spackling and sanding to get things as smooth and flat as you want.

Yes. Before you paint over it, check your work using a trouble light _against_ the wall in a dimly lit room. I know this sounds odd, but it works exceptionally well to see the imperfections. After I found out this trick, my drywall patches and seams are professionally done.

Use a block as the previous poster noted. Start with coarse sandpaper or it will instantly clog with the new paint. My hint is to light the area at a grazing angle to check how you are doing, as it will show any imperfection as shadow/bright spot. If it looks good with grazing light (from several lighting directions) you'll never see it with normal lighting.