Back in the day people used compound and a rotary buffer to even out a paint surface (kind of like what wetsanding does...it was preference, my granfather did it the compound way, my uncles did it the wetsanding way).

Now it's used as a last resort for getting out wetsanding marks, although if you can't get them out with a agressive polish you're likely using too coarse of wetsanding paper.

I wouldn't use too agressive of compound to get out scratches. Risky business.