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My other question is how does this method seem to be holding up, time wise?

If you do a good buffing job you should be fine for a while, but me without a buffing wheel, mine lasted about 2-3 months before it started to cloud. But using that blue magic cleans it up. Or if you were to use a polishing compound instead of blue magic I am sure it would last longer.

I did mine previous with just buffing (no wet sanding) and they lasted a little while, but I had to pull off the driver's side today to reseal it to prevent moisture and decided I'd wet sand them.

I followed your steps for the most part, but I learned a few things doing all the body work on my MR2 that I incorporated.

1. Removed headlights from the car.
2. Washed with warm water and soap (elbow grease to remove bug splatters).
3. Wet sanded with 400, 600, 800, 1500, and then ended with 2000 grit wet sand paper. <--- I added soap to the water to help with lubrication and removing sand from the surface.
4. I cleaned rinsed them with water and then used the air compressor to dry them off.
5. I buffed them 3 times each using a Meguiar's Buffing Ball and a drill (I used 3M Rubbing Compound - specifically the 1500 grit and small scratch remover).
6. Then I used some Mother's Mag and Aluminum polish and buffed that in 3 times.
7. Buffed by hand with a clean microfiber cloth.

Before:




Finished wet sanding:


Final Product:





Thanks for the write up .

Nice! Looks good! welcome

Here's one thing I learned to help them lenses keep there clearness a little longer. After the sanding and buffing and whatever else you do you might want to re-seal the plastic lenses so it doesn't get sun damaged as quickly.