Totally a personal call, but the sanding and polishing that I do on my restorations is to take care of the dings, scratches and discoloration of bygone years. Once the handle is brought back to life, I don't see a need for ongoing polishing. Soap residue etc. comes off without the need for polishing compounds but even if I wanted to buff a handle up a bit, it would not be difficult to keep the knot out of it.
Polishing is easiest when you have the old knot out and before setting the new one. Whether or not you polish the handle is totally up to you, but in my opinion unless you are re-knotting a brush with a personal history I would always polish the handle first. A pretty new knot deserves a pretty little home to live in.