Grit sequence is a slightly debated topic--just do a search on sanding and you'll see. As I said earlier, wet-sanding with 600/1000/1500/2000 is what I did, although some say that the 2000 is a waste of time. (Heck, some say that anything over 600 isn't necessary, but I think that's bonkers.) The 600 should work to feather the edges on the gelcoat, too, although you could back down to 400. Don't get too aggressive there w/ a coarse grit or you'll risk eating up the old gelcoat that you're trying to blend with.

As for the type of sander, it's called a hand. A powered sander is way too aggressive, and you don't want to take off any more than is needed.

Hey, have fun. I did, and I was admiring my shiny hulls just this afternoon as I was getting ready to leave my driveway. I think you'll be more than happy with the results.