ok, if the scratches are really close to the actual cut, then you can use car molding and cover it up.... pictures would help us help you alot more, and alot easier..
For the scratches, use fine paper, start at like 600-800 grit, then slowly work your way up and up, then use water along with it. Should get rid of that problem. For the pictures, if the cam has it its called "macro" and it makes your pics tons more focused. --If you have a steady hand..
yeah, for plastic i lightly use some 800 grit dry, it works quite well. for paint i would use a higher grit and use some water with a bit of dish soap in it to make it glide well. itl be nice and shiny then. yes macro on your camera will make your pictures 1000 times more clear. but if you can rest the camera on something or use a tripod so the pics are less shaky.
do not call the dreamcast old!!! ( heh ). Anyways, I've found for plastics 1000 grit will give you a near perfectly smooth finish. Wet sanding helps. Just get one of those 3M assorted Wet & dry packs of sand paper. Should contain 2 sheets of 350, 600, 800 & 1000 I believe. (1000 grit might not be included, I don't remember)
maybe i should do a dreamcast mod, they only cost like, what? $30 US new? i renember when i saw in a wal mart flyer that the games were like $70 and the system was $60.