I think it is great that you asked this...because it is something I asked too. I am not only new to "boating", but I am new to "dremeling" too

Yes, sanding disk is on a mandrel with no backer. Watch your dremel speed. Them props get hot...and it is much better to work slower, than to take too much off.

As to your dust question...well...I would not want to recommend what I do...so I will leave it at that.

As an added note, I use one of those magnetic balancers, and apply pressure so that the balancing shaft is on one magnet, and very close to the other one (so it rotates very freely). I think this is probably more sensitive than what is actually needed, but it is what I use (have you ever thought about the balance of the drive dog??...with the set screw on one side...).

Sean