That does not look to me like he did nearly the damage I though from your initial description
If you are comfortable damp sanding with 2000, I would suggest that as a starting point. Use a foam backer. Check your progress after 15 strokes. Read Mike P's threads on wet sanding.
After it is knocked down, compound and polish as normal. Make sure you do not concentrate too much energy/heat in the area of the defect. Make it part if a normal 2' x 2' section.
You are, IMO, safer sanding that, than you are trying to compound it out start to finish
Ask someone to take some good before and afters
For goodness sake, talk him into letting you do the entire car, those water spots are only going to get worse
Good Luck & Have Fun