Grinding sanding dust into blanks is what drove me to learn how to use my skew chisel to finish with. My first red/white/blue spectraply ended up red/white/pinkish gray so I learned how to sharpen and use the skew for a finish cut. Rarely use sandpaper now, just micromesh after applying a finish.
As Ed mentioned, some woods will bleed into others even just gluing them together. The pic below was going to be bloodwood & curly maple, but I knew i'd get bleeding so I put a walnut veneer between them. If i'd sanded, i'd have still gotten the bloodwood color on the maple, but with the skew all the colors stayed where they belonged.
Hope that helps.
earl