I agree with John L., to me, sanding with that coarse of paper on any kind of turning indicates a problem. The problem usually is the tool is not sharp or the turning technique is not good, or in the subject in question, the wood is the problem. When the wood is OK and I have an issue I can't solve with a clean finish cut, I use small curved cabinet scrapers instead of the coarse sandpaper. (I hate clouds of sanding dust and rarely use power sanding.) Sanding with coarse paper can more easily leave the surface nice and smooth but undulating where the paper cuts into softer parts of the wood. Sanding spalted and perhaps slightly punky wood is worse. Another issue I have with coarse sandpaper is it makes preserving crisp corners and fine detail difficult.
I have turned some very punky wood, almost rotten, and have gotten great surfaces without coarse sandpaper. My secret? Thin CA glue. I use it like a hardener - let it soak into the punky surface and harden up everything. No accelerator. I reapply until it doesn't soak in any more, wipe off any excess with a paper towel, then make a cut. I add more CA if I start to cut into the untreated wood.
Note that the CA does in fact darken the wood a little just like oil but the things I've done this way, spalted and not, looked good to me. Another issue is CA fills the air with eye- and lung-attacking fumes so I keep my face away, use ventilation, wear good safety glasses, and sometimes wear a respirator. It does take a lot of glue for a large piece but I buy CA in larger sizes.
The last one I did this way was a cube of spalted yellow poplar turned in the three-corner mode. It was so soft in places the tearout was horrible. No way to cut it cleanly. Sanding it smooth was out of the question. With the CA method, I think I started with 400 grit paper, sanding by hand. The final surface was as smooth as glass.
BTW, by using the small cabinet scrapers, I get good surfaces in less time and rarely need paper coarser than 320. I use the scrapers with the lathe spinning very slowly and often with the lathe off. Besides general smoothing of bowls, with the lathe off is the absolute best way I've found to do a non-continuous surface such as a piece with corners since it is often difficult to get a perfect finish cut on the corners and sanding with the piece spinning is not reasonable. The scrapers are also an easy way to get the bottom of the inside of a bowl perfect.
As for the oil/wax sanding technique, I have used oil-softened wax and oil itself as a wet sanding aid to fill pores. I can't imagine using vegetable oil.
JKJ