Joe, I am using a standard medium grit wheel for grinding the relief.
The wax I am using is actually called a conditioning grease that came with a cardboard wheel set I purchased. I don't know exactly what it's made up of, but it has properties similar to paraffin wax. As long as it will melt to keep the blade from building heat, I think any wax would work.
I make strokes going away for one side of the blade and toward for the other. One thing I forgot to mention is when grinding a burr, I usually go in a circular motion. When removing the burr, I just make smooth strokes. It really doesn't matter how you do it, but this is just the way I do it.
Yes, the guide rides directly on the hone. Before I started regrinding the factory bevel with the grinder, I would wear out a guide each season. But if you will grind your relief with the grinder, I wouldn't be surprised if a guide lasts 10 years or more.
As a side note, the Simmons heads you used to get when Jerry owned the company had a better angle ground on them right out of the package. They didn't look quite as polished and neat as the ones produced now, but boy would they sharpen up quick.