Really depends on the alloy used. Most aluminum automotive body panels are 2000 series aluminum, which really isn't that bad, except it's susceptible to corrosion. It's sometimes "clad", or covered, with a 6000 or 7000 series alloy which greatly increases resistance to corrosion.
Aircraft were manufactured with Alclad, a process where the aluminum alloy was "clad" with a thin coating of pure aluminum. Pure aluminum has very good resistance to corrosion, but it's structurally very weak. Combining the two gave the strength of the core material, with the corrosion resistance of the cladding.
The problem though is that, because the cladding's soft, it's easily damaged. And once it's removed, the underlying aluminum alloy will start to corrode. The same would also be true for automotive panels which are clad with 6000 or 7000 alloy, although these two alloys are way stronger than the pure aluminum that was used in Alclad. ( have no idea how thick the cladding would be on a modern automotive panel though)
So as far as your hood's concerned, I'd find out exactly what aluminum it is before I did anything to it. And I sure as Hell wouldn't sand it before I found out if it was clad, and how thick the cladding is. However, polishing with an orbital, or by hand, shouldn't hurt it provided you don't use too heavy a hand.
FWIW, my personal opinion (it's YOUR car) would be to leave it alone.
Hope this helps.
