MIMF

I have glued on the binding and purfling. With the teflon strip removed should I scrape the purling flush with the top and bottom before I install the abalone shell?

This is really personel preference. I scrape the purfling close to level but not all the way, do my inlay, and then level the inlay binding and purfling together.

It depends on how thick your shell is, or if you are using Abalam how thick the good color is. I would suggest getting the bindings and purflings very near level before installing the shell strips. This way you remove the least amount of shell and get the best appearance. Be careful when installing the strips to keep them flush with the surface or just slightly above, but NOT below the surface or you will end up filling the void with glue or finish, neither of which look good over shell.

Doing the final leveling I use a sanding block and 320 grit paper, followed by a very sharp cabinet scraper. Watch the corner of your scraper so you don't inadvertently make any gouges with the corner over the wood. Put a piece of tape on the corner, and scrape very lightly to remove the dust in the "pores", and be very gentle around the shell as it is formed in layers and can be flaked off if scraping aggressively.