Can It Be Saved?

[greenspider]

Hi group.
I have been playing with leather for many years now, off and on.

I have a decent grasp of what I'm doing, within the perimeters that I'm working. That said, being only self-taught there is much I still do not know, especially concerning restoring old leather.
My Sister brought me her handbag to see if I could clean it up for her.
It had been in storage for many years and looked like it.
After a full bottle of 'Fiebings liquid Glycerin saddle soap', some "Lexol Ph cleaner", several warm water rinses and a couple of rags (now destroyed) later, my rag stopped coming back caked with brown "gunk".
I have no idea what I was cleaning off, an old dye paste wax? Years of crud accumulation? Both?
Finally the leather started to look like I was making progress.
I used some Lexol conditioner on it last night, so the color has gone dark. I assume it will fade in days!?

(I (now) know that "before" pics would have gone a long way in helping to better understand where I was and where I am now, but it's too late for that now, so instead I offer pics of the situation as of now.)

Here's a couple of pics showing the spots I am questioning.
1) The 'shiny' spots I assume are an old finish?
What is it and how do I removed it?
2) Once I get it cleaned of the old finish I assume it will look like the areas that are now dull/leather looking?
3) At this point what do I do?
Do I put more conditioner on it, and then put a coat of light dye on it?
4) Now for the "finish".
What kind of finish would be best for this bag?
I am partial to a natural finish, but I want it to have some protection.
5) The last image is of a scuffed area inside the bag.
Can this be sanded with sand paper?
Also the handles are rough. Do they need more oils?
Could they be sanded smoothe?
I recently read somewhere that that was an option in some cases.

If anybody here would/could help me figure this out, I would be ever grateful.