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That sounds right to me.

I don't think you need to clean off the old compound unless it was applied in a heavy layer. In that case I would scrape it off and try it without adding any more. If you did it right the first time...

Applied correctly there should be a very thin coating of diamond paste on your paddle strop. Once it's on there I don't think you will need to add more for a very long time unless you are finishing...