You presented more than one issue. Response a little long 'cause details matter:
1. Wet sand on wood? I do so with every wooden pen blank to which I have applied CA finish. To do this without introducing moisture to the wood, I start the CA finish process by making a small puddle of THIN CA on a small, discarded component parts bag. Dip one end of the "ready-for-finish" blank into the CA, then forcefully shake off the excess onto the floor. Repeat for the other end. After a moment, repeat the process for both ends. Then, when dry, scrape the inside of the tube end with a razor knife to clear any CA from the tube/tube end. The wood part of the end is now well sealed. Continue with CA finish process. When ready for wet sanding/MM phase, do so with minimum "wetness" on the MM pad.
Important note: All steps are done with cone shaped finishing bushes on a short mandrel. This means no residual CA coating the end of the blank is contacting the bushes. This could be done equally effectively between centers. The contact surfaces are the parts that I cleared with the knife meaning the blank runs smoothly during the process.
Only AFTER the wet sanding do I remove any excess CA from the wood ends of the blank, maximizing the sealing effect up to this point, but now obtaining in a good fit to the hardware.
2. The answer to the second part of your question is that no matter what finish process you use, the finished wood pen (blank) WILL seek and reach equilibrium moisture content with the environment. You cannot prevent that, only slow it down. The best approach is to always start with well seasoned wood, and ideally wood that is at equilibrium with the environment where the pen will ultimately reside. (Nearly impossible in many cases, as you may not know where the pen is going to be, if you sell your pens.) Making a pen from very dry wood is the best approach, since a wood pen GAINING moisture is generally less troublesome than a pen loosing moisture, as far as potential for cracking to occur.
Some turners elect to avoid wood as a pen material. Others educate themselves as to which woods are more dimensionally stable than others, and then favor using the more stable woods.
Happy turning!