Yes, you use the filler then sand, if you still have low spots fill some more and sand. Just watch out, balsa sands very easy and you can sand it to the point you can read through it.
The trick to getting a good covering job is making sure the balsa is clean and free of dust. I don't use anything special on the wood but I have tried the hair spray and it works pretty well, not needed but it works. I have never tried or heard of anyone using primer before covering so????
First blow off the plane with air, then I use a stiff paint brush and hit it with air again then wipe the plane realy good with a tack cloth, the tack cloth is found in any paint store or hardware store in the paint section. Now just cover. For the most part the covering sticks to itself so you want to have about a 1/4 inch of over lap.
I use the Ultracote and like it a lot better then the mono but that topic is like opening a can of worms here, it's also been debated to death, do a search and you will see what I mean.