You can most certainly substitute spruce for bass. The spruce will be a bit stronger.

Use balsa where the kit says. A hardwood will make somethings harder to work with, and will add weight.

We'd use 120-grit for the rough work, and then go to 200-220, and finish off with 320-400. If you want a super-fine finish before covering, wipe the wood off with a slightly-damp cloth, allow it to dry, and then sand off the resulting fuzz and hair with 600-grit. No need to go finer because the wood has a rough grain that the sandpaper can't cure. If you're painting, then you'd fill the grain with a good sealer and go to 800-1000 grit on the sealer and primer.