Hm... It doesn' t happen to me Yet. (Oooops, I don't use Dremel for sanding a blade.)
Yes. Hand sandig is the best, and most time taking technique. I did so far about 3 blades, but all by hand.I think the first step to do sanding is hand sandind, so You can learn how to hold a blade,etc.
I'm really sorry for the blade.
Try to find the piece with a magnet.