I have mulled this problem over myself. I build in my livingroom so I really need to keep the dust under control.

What I am going to do is build a medium size down draft sanding table, 2'x2' 2'x4' maybe. This is a table that has fine mesh on the top. There are are sanding tables ready made and you might want to consider that but they can be pricey.

Use a small squirrel cage fan and duct it out of a window. Like the one below. Use a small one or one that is low RPM to keep the noise level down.

How do you duct it out of a window without making it look bad? Build a duct that flattens out to the width of the window and about 1" - 2" tall, depending on the width of your window. Put a screen on to keep the varmints out and a louver to keep the weather out. With a little engineering you can make the louver automatic.

You could build a down draft table that filters the air back into your workshop similar to this http://www.woodworkersworkshop.com/p...ding_table.htm

HI all again,
I earn my hobby money doing HVAC. I'm enjoying this thread. Here's another $.02 worth. I metioned adding 3M 77 on a filter in front of a 20" box fan. Use the cheap 30 day filters for this. Pleated filters (clothe looking) would work great by itself. There is also a washable filter that resembles plastic strand matted together. These are also considered permanent filters, and you can cut to size. Think they measure about 24" X 30". These you just taked outside and wash with a mild cleaner and the hose.
Also if you vent outside, you need to have a very drafty house / room, or an intake from where you are exhausting to. Can only remove very little air without replacing it. If you vent outside, you need to replenish that air that your trying to get rid of. Like trying to blow up a wooden ballon, but opposite. Can only pull so much of a vacuum in a wooden room.
If you paint in front of a fan be aware that the motor in that fan should be rated explosion proof. Just a word of caution. I'm guilty of painting in front of a attic fan mounted in a window with a filter in front of it. So take your chanes.
Thats enough from me.

Check out Rockler, they have a dust unit for less than two hundred bucks. Or you can build a box around a squirrel fan with a couple of air-conditioner filters up front.

My solution to balsa dust is to reduce sanding as much as possible. Whenever possible use a plane instead of a sander.
Buy a good quality balsa plane for use on balsa and a Stanley 60 1/2 block for harder woods.
Not only does planing reduce the amount of dust, it gets the job done much faster than sanding does.