When fine sanding a completed piece, why should final polishing with steel wool be avoided?

Final polishing with steel wool should be avoided primarily due to the risk of iron stains. When steel wool is used on wood surfaces, especially when finishing with oil-based products, fine particles can break off and become embedded in the wood. When these iron particles react with moisture or certain finishes, it can lead to unsightly stains which can mar the appearance of the workpiece. This is particularly problematic with soft woods or surfaces that have a light finish, where dark stains from the iron are more visible.

While the other choices like iron dust particles, uneven results, and discoloration do have relevance in different contexts, the primary concern in the context of fine sanding and finishing is the potential for these iron stains, which can ultimately ruin a meticulously finished piece. Therefore, it's recommended to use non-ferrous materials, such as synthetic pads, to avoid any risk of staining while achieving a smooth finish.