Having used a touch up pen before and knowing that it would still look like crap after just using that - I thought I'd try and "feather" it in. I mean, Chris Fix showed how to do it in like 20 mins right?! (Go ahead and insert your slappy emoticons here

Anyway as you can see in the photo below I've still got some work to do here but I'm afraid to sand any further because the part I want to keep sanding is circled in orange. However the part below it is now extremely dull. I THINK I'm starting to get into the primer here? That's basically my question though - what should my next step be? Just keep working the area outlined in orange that I'm actually trying to fix or am I at the point now where I have to apply paint to that "faded" part as well? So far I've been using 800 grit (although its this thin sponge kind of thing so its quite difficult to be extremely precise). I also have 1200 and 3000 grit. All the sand paper is 3M Automotive.
Thanks in advance guys.