I've found that no matter how carefully a model is handled, or how carefully and endlessly it's sanded, that it isn't until the covering iron is heating that several dents appear. If you have this problem also, try this first:

Wet the dent. I usually use spit on a fingertip.
Let it soak in for a couple of minutes.
Gently iron the dent with the iron set hot enough to sizzle a bit on contact with the moist balsa. Iron the wood dry.

I was amazed at how well this works! Sometimes the wood grain rises a bit, so then a light sanding finishes the repair.
I hope you enjoy using this technique! [8D]

I've used the same (similar) approach for a while now. I did a small presentation at our last club meeting for the new guys.

But I use a small syringe, like the ones used by diabetics, especially after the plane has been covered. With the syringe you can inject water right into the dent, then when heated with an iron the water flashes to steam and the wood expands, just as you observed.

It's particularly useful for those dents in the leading edge that our planes seem to "find".
Dennis-