I bought the 3M Headlight Lens Restoration Kit #39008 ($20 at Advance after online coupon). It comes with the drill attachment, (6) 500 grit sanding disks, (4) 800 grit disks, (1) 3000 grit disk, and a bumpy sponge pad to apply some rubbing compound to finish it all off. The first step is to sand with the 500 grit until the entire lens looks white/frosty/milky. It says "if any portion of the lens looks clear or glossy, continue sanding before moving to the next step".
My Impala lenses started with a very clear jagged "line" below which the lens was completely obscured, and above which it was fairly clear. After using all (6) 500 grit disks on both headlights (and both headlights of my '97 Taurus), you can tell they've been sanded, but that line still exists and the headlight looks pretty much the same. The lens feels smooth to the touch, but I'm thinking these headlight lenses might just need to be replaced. I don't see how continuing to sand and then applying the rubbing compound is going to fix this. Now, my Taurus headlights had not such "line". But they also did not sand to a milky/frosty look. They look pretty much the same, although you can tell they were sanded.
Should I continue with this? The Impala "damage" really seems like its on the inside. Should I try a rougher grit? 500 grit is VERY fine. Maybe drop down to 250 to see if I can sand down to the point where that stuff below the jagged line is ground away???