Wow, that seems like a lot of effort. I use whatever my LHS has in stock. Model Magic, I think. I get the balsa-colored type. It's a little lighter than the wood, but who can tell after it's covered? Sands easily, maybe a little faster than the balsa, so you have to be careful or use a block. You can thin it with water (have to after a few months). My only complaint is it takes awhile to dry. I let it go overnight if I can.

I don't like working with balsa dust. I use a respirator when I sand. Doesn't bother the lungs so much as the sinuses--gets in there, plugs up the ears, gets infected--forget it.