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There should be no dust as lapping should always be done wet. Have you read the Lapping 101 guide in the Wiki? You should.

Do you have any idea what caused the chipping?
Did it occur during honing or lapping?
I've never seen such chipping on any of my coticules.

Personally, I would not lap away the slant. It...

First, you want wet/dry.
I'd say you'd be fine with about 320 grit.
You don't really need to go very fine because a coticule is constantly refreshing itself by releasing grit so it will get...