Nooooooooooooooooo!!! (that's a slow motion "no" like you see in the movies )So I think I should lighten the colour a little with wirewool perhaps? Is this the best thing to use?
Steel wool is the devil and has no place in guitar building (or general woodworking for that matter) IMO.
Synthetic sanding pads (3M brand or similar) are the way to go. I have railed and ranted about this in numerous threads and forums. They are available in a range of grits from a 0000 equivalent to very coarse. However I only use them for the the fine textures as traditional coarse sandpaper works perfectly well.
IIRC, Big D uses a RO sander for this which I also disagree with, but to each his own.
That's a nice looking burst too! Well done.