If you haven't already, or don't know how, hopefully this write-up will help everyone out in making their headlights shine almost as well as they did when they came off the factory floor. Hopefully.
Starting out, here are the tools/stuff you need to buy if you don't have any on hand.

From left to right: 320 grit sandpaper, 1000 grit sandpaper, 2000 grit sandpaper, 3M rubbing compound - medium cut, Meguiar's PlastX polishing compound (optional), with paper towels and a water cup for wetsanding. And of course, beer (unpictured because it was being held)
First, take a look of exactly how far the "fogging" has progressed. Mine were pretty bad. Here's some close up pictures of the damage:
First off, take the 320 grit sandpaper and tear the paper into fourths. That is, if it is the same size. I guess tear it down to something that you can handle well. Take note of the pits/etc that are on the cover. Start sanding in a circular motion, with enough pressure where you feel comfortable. Obviously we don't want to put so much pressure it cracks, but I doubt that'd happen unless we're in the StrongMan competition. If you're using a motorized sander, take note that it will cause friction and can cause the plastic to burn. So take it slow, and don't push too hard.
After a generous sanding of 320 grit, you should end up with something like this. It WILL be cloudier, however it will feel smoother. This is what we're looking for.
Make sure the sanding is uniform. If you spent enough time on it, it will be.
You CAN use 600 grit for the next step, but I skipped ahead to 1000 grit. Go ahead and tear the paper into a small enough piece that you can handle. I used half of a full sheet, or two quarter-sheets. Remember the cup of water you got? This is where it comes into play. I use a dipping, method, simply dip the paper itself into the water and begin sanding.Feel free to use a sponge, or something else. As long as water can keep the surface wet. Keep in mind here that you are using a high-grit sandpaper and it is easily...used up. Pressure here should be kept to a minimum...the suction from the water and the plastic should be enough. You can really just move it around on the cover, obviously enough to do the job. Spend enough time here too. Don't cheap out and be lazy. If you take the time, these can turn out great.
Here's the result from 1000 grit:
And 2000 grit:
Now comes the fun part. Break out the paper towels and dry off the headlights. Admire your work thus far. Make sure that the surface is uniformly smooth, and it doesn't have any big scratches and/or pits. If so, you didn't spend enough time with the 320 grit and unfortunately you'll have to start over if you want it to turn out as best as it can. Follow the directions on the container, it's pretty simple. Shake well, and apply some to a paper towel. I folded mine up a couple of times to withstand the rubbing. Rub the surface of the headlight cover with a medium amount of pressure in a circular motion similar to waxing a car. In fact, it's essentially the same thing. Except, there's no drying time. You really keep rubbing it until it dries up itself and goes back onto the paper towel.
Admire your work:
This next step is optional, but I highly recommend it. In the same manor as the rubbing compound, break out the PlastX. This also cleans the plastic, and is a lighter cut and has smaller polymers that will get inside the tiny microscopic cracks and make it even better looking.
Check it out:
Here's a shot showing before, after. Incase you can't tell, the passenger side is polished, the driver side hasn't been touched yet.
And a final picture:
Not the best because of the glare on the passenger side, but i think it looks great. And i didn't have to spend $150 a piece on those ebay headlight replacements.
Hopefully this can become a sticky!
Avenger1stGen 123abc