Starting my 65 vette project and have this decklid. Has been re painted at some point I the past with BC/CC. I have sanded the decklid with 80 and was planning to sand to 400 then seal before paint. Good plan or should I sand all the way to bare fiberglass?

I also have two holes from the hard top I plan to fill. Plan to sand from the underside and lay woven fiberglass mat then body work from the top. Any issues here? Does that change your answer to the question above?

On older Vettes, you need to sand it to get all the paint of, at least. 80 grit is a good selection. If the surface is wavy, or needs attention, you can sand further. Even if you break into fiberglass, it's OK, but stop at that point.
I like to seal up the old 'glass with either Feather Fil, or some high build epoxy primer. These will seal it up, and fill any minor imperfections, but you need to start sanding it with 180 or so, to further perfect the surface. If you use epoxy (high build only!) If you haven't broken through, you can proceed up to higher grits. In the end, I like to shoot another coat or 2, and then use 400 or higher grits to prep for paint.
As for your holes. Good idea to start underneath, But to do a proper repair, grind down the area around the hole, but be sure to taper the depth of the ground area, being deeper by the hole, and doing less grinding as you go farther out. Use your cloth to fill this area.
When it has cured sufficiently (at least overnight) do the same to the topside. The idea is to have fresh cloth cover the hole entirely, and sandwich the thinned areas around the hole. Don't fill the low area completely with cloth, though. Do one or two layers of cloth, then switch to matte, as you make bigger and bigger patches surrounding the hole, until you get close, or slightly above level with the surface. When cured, sand down the high spots and fill, using either regular filler, or 'glass reinforced if the low areas are a bit deep, to perfection. Seal with epoxy primer, as above.