I do not use a lathe or any other power tools. It is all hand work. I use abrasive paper starting with 220 and work up to 2500. 220, 320, 800, 1000, 1500, 2000, and 2500 grits. I believe that it all came from Amazon. The 220 and 320 are garnet, the rest is wet and dry paper. Garnet is preferable as it is softer and will not embed in the copper and wear away the brushes. I have not been able to find garnet any finer than 320, but I believe 600 is out there.
The goal in reworking the surface of a Lionel commutator is to get it square to the shaft, flat and smooth. The brushes can not follow an uneven surface as fast as the motor turns and will just bounce along arcing all the time. The smooth surface finish is to reduce wear on the brushes.
I work the commutators against a steel block with a 0.127" hole in it. The surface is flat and the hole is perpendicular to the surface. I use a small center punch, with the paper laying on the steel block, to make the holes in the paper. Then turn the paper over and cut off any of the paper that carried through, with a sharp knife, to prevent a lump in the paper. Most of the time is spent with the 220 and 320 paper taking the plastic down even with the copper surface, and then working the copper surface to get the low spots out. After that is done the polishing goes fairly quickly. I usually do 6 back and forth twists in one place and then move to the next hole and six more. I do this all the way across the end of the paper, then move on to the next grade. Clean the paper off with a stiff paint brush when it is getting plunged. You can feels and hear it when the paper needs cleaning. The garnet, which does most of the work, wears out fairly quickly. The wet and dry last a long time. It takes between 1 and 2 hours to do an armature. I clean the armature, including the slots, before I start the surface refinishing and then blow it off with canned air when I am finished. Check the three connection points prior to starting. Sometimes the wire is above the surface. This will need to be resoldered prior to refinishing or you run the risk to cutting the wire off.
This is what you start with.
Following is a sequence of photos I took when I was trying to remove a particularly deep series of arc damage. In the last photo, I am finished with the 320 garnet and the polishing process is about to start.