On the diesels and glow engines I have made I go one grit further and use 1000g for final lapping of the parts and then a very small amount of the 1000g and plenty of oil to finally lap the piston into the cylinder. This is the same silicon carbide that Axi sell from Veritas, the 1000g can be hard to find but usually crops up on e-bay as well as 1200g which would do.
Diamond can have a bit more tendancy to embed in the metal.