"As far as the two walls that need to come down .25mm, I have those right? Each one needs .25 off?"
Yes, you need to cut half of the total needed.
"But which sandpaper you suggest 600 and than 1200?"
You may need a different grit to remove the material than what is used to finish up. Match the grain on the reflector (rehaut), then go with a slightly rougher grit to remove the material to save time. After it is almost sanded to size, finish up with the matching grit. Be careful not to use paper that is too rough because the scratches left behind may be hard to sand away with the finer matching grit. When spinning the case, material will be removed rapidly compared to hand sanding so measure the opening constantly.
It is hard to match the angle of the reflector (rehaut) so I usually sand or machine the excess material straight down at a 90 degree angle to the dial. This will not be noticed and it prevents getting into the angle of the reflector (rehaut) and thinning the case neck down.
Sometimes the number on the paper does not match the grit. I have some 'off brand' 1000 paper that is as rough as 320. I would try 600 or 1000 to remove the material and see how it goes. If you start with something rougher, 320 maybe, it might be hard to smooth it up.
I have had good luck with the 3M 'Wet or Dry' (Minnesota Milling & Manufacturing Co) sandpaper as it is always consistent. If it is not available, go with another top quality brand.