Wouldn't trust any sort of abrasive paper on a distributor cam. I use a Dremel tool with a buffing wheel on it and some metal polish instead of compound. You want to polish the cam, not cut away material and chance changing the shape or size of the lobes. You just want them mirror finish smooth.
The last polished distributor cam I installed in my Tudor with a brand new set of (old style) points, I set them at .020 and in a couple thousand miles, they are still at exactly .020, no wear at all. Typically, a new set of points will have to wear in, requiring re-adjustment around 500 miles after installation. With a polished cam, zero wear on the new points.