i am usuing the interlux products sold by clc.  there is no mention of how far to take the sanding of primer in the tips section.

Assuming you're using high-build primer, which fills scratches, hollows and dings. By the time you get the smoothness you want, you will have sanded most of the first coat off. Most of the second coat will remain. -Wes

My understanding is that the primer is simply to create a super smooth, fair surface, not to aid adhesion.  So I don't think a second coat is really necessary unless you are trying to get away with minimal finish coats.  Red and yellow typically require more coats than other colors, so an overall even colored primer second coat may reduce the number of finish coats required.

On my wherry, the Oyster White interior covered the splotchiness of the primer in two coats completely.  On the yellow exterior it will take 4 or 5 coats to get total uniformity.

i am using the pre-kote and i started with a very smooth epoxy finish.  so i think i will just sand until i get the smoothness i want and then paint.  i have few flaws and the ones i noticed after a wash and dry are barely noticable with the fingers.  this is my first time to paint.

I agree with Wes and Pete.  Here are a few pics of my Jimmy Skiff during and after painting...