I considered sanding/buffing the exposed gelcoat while the water level was down, but decided not too. IMO, it's a fruitless battle where this gelcoat will eventually begin to fade from the effects of sunlight, chlorine, etc. Additionally, I want the shell to last as long as possible and have a concern that continued aggressive sanding would eventually erode too much of the gelcoat and reach the fiberglass shell itself. When full of water, the pool looks great, just like a pool with a white color, so we've adjusted to what we have and enjoy our pool.
The chalky transition is explained (scientifically) very well by
@JoyfulNoise in his replies above. The thing about the pic below is that if you zoom-in closely, you'll see tiny dark spots in the shell that remain unaffected and retained their original deep blue color. There are areas like this all around the pool. In my opinion, this calls to question quality of the gelcoat - either the batch that was mixed and/or how it was applied.
We have a FG pool survey
HERE in which TFP continues to evaluate FG pool conditions looking for any notable reasons that may help to explain why some gelcoats change, but to this point there is nothing substantial. Simply put, some gelcoats change while others do not. To-date, there is no correlation to the method of chlorination, FC, CYA, or pH levels, if maintained per TFP recommended level ranges.