I prefer using a stone because it'll concentrate on the high spots much more than sandpaper/emery cloth willIf you decide to reuse those pistons, give them a nice little polish with 600 and 1000 grit paper and then a buff, be a shame if the ridges on those pits ruin your new seals
Battery box... seems a fine spot for the starter relay. Definitely would not house the r/r there - keep that hot thing away from the battery please. Best if you can get some airflow on it.
I don't have stones that fine, think 400 is my finest one. Wrap the paper around a stone, plastic card, etc for highs then finish without backer. Coarse grit removes too much of the coating on the piston imoI prefer using a stone because it'll concentrate on the high spots much more than sandpaper/emery cloth will