I've seen very very few headlights that couldn't be saved. What you need to do is think of it like polishing aluminum, or anything else like that. The headlights on my son's GTO were so badly damaged by rock hits it looked like the lenses had been sandblasted. (Lots of freeway miles) I literally had to start with 80 grit on a DA. He just about died when he saw me take a DA to his lenses and make them look like frosted glass!
After using a coarse enough sandpaper to get down below the damage, just keep going up in paper until you get to 1000 or 1500. Dry sanding until 360 or so is ok, after that you need to wet sand. Use a block to keep it flat, don't "dig" into the surface. Once you've gotten them smooth with 1500 paper, break out the polishing compound and a buffer. (Not like an orbital waxer, an actually rotary high speed buffer.) Same thing, just keep going lighter on compound and buffing wheels until you've got them looking like glass. You have to buff fast and hard enough to smooth the plastic, but NOT too fast and hard that you burn or melt it. Even if you do burn it, just sand that section back down and start over.
When you're looking at spending a bunch of money on new lenses, a little elbow grease is relatively cheap.
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