I used PlastiDip on my first build (of which, there is a thread I made with a few pictures), and I don't believe sanding it would be the way to go.
The best results I've seen from foam builds were made by DocHoliday. He builds the parts out of foam, coats it in PVA (xrobots idea), and then uses Rondo, which can be sanded and painted. That's what I'm going for now.
Also, the PVA problem you had can be remedied by using Mod Podge spray (per DocHoliday). It's a Matte finish Acrylic sealer that goes on before the Rondo and from what I've seen produces amazing results.