1.) If using any kind of dye, but especially with a water based product, the application will raise the grain of the wood a bit. Also; water based dye is going to take a lot longer longer to COMPLETELY dry; it may feel dry at surface to the touch; but isn't really. Let it set at least an extra day or longer depending on temperature/humidity levels after you THINK it's dry. If you don't you may get a little residual grain raising that would need another sanding, or if you start shooting sanding sealer/lacquer on top it may cloud up in places.
"A further dye question-my 1st instinct was to use black, sand that back then use another color, I think blue in this case. But, I don't want the blue to be dominant, so should I dye blue first, or can I control the amount of black that remains by how much sanding I do?
2.) Personally, I think it usually works out better to do the darker color first when dying. What kind of wood with which sort of figuring will you use? That could make a lot of difference... Generally you can control the amount of color by sanding back to a degree; but having never used water-based dyes you might run into an issue in which you might have to sand back more than you want due to the grain raising and re-apply to get the coloring effect you want. The type of wood used is a big factor in this regard.