What is the best method for sanding a graphite arbor down to size?

The arbors sand pretty easily. I took a short section of the appropriate diameter wood dowel, and used a little electrical tape so that the arbor would slide onto the dowel but not twist too easily. Then I chucked it into my drill press and sanded with light pressure. Because a drill press doesn't support the dowel at both ends, it's important to use a dowel which will sufficiently fill the chuck, but not to be any longer than necessary. The closer the arbor is to the chuck, the less chance there is for lateral movement. For the same reason, I hold the sandpaper between my thumb and index finger, so as to apply sanding pressure from opposite sides of the arbor simultaneously. Obviously, with a bit more effort, you could do it on a lathe.

Because the arbors sand so easily I put the arbor on a drill bit that is a little tight for the arbor hole prior to reaming, chuck it in a power drill and run it up against a foam sanding block.

That is what I thought but I just wanted to be sure.

Thanks for sharing the knowledge!!!