1) Either will work. If that's seven layers of clear, then I'd be tempted to do a sand now. Either way, I'd just leave it a couple of days now for the thicker layer of finish in the run to dry properly. I don't think you'll really need fifteen coats of clear. Phrozin does 15 coats overall including primer, colour coat and clear coat. Certainly do enough layers to allow you to sand back flat, but you don't want too thick a finish.

2) I used gum turpentine (artist's turpentine) for thinning TruOil. It lowers the surface tension so it fills in any dips better. TruOil has a high surface tension so tends to follow the surface undulations. The more of the dips you fill, the less sanding flat you have to do before polishing.