When sanding prior to painting you only need to lightly scratch the paint surface to provide a "key" for the new paint to stick to. A ten minute job. Wipe off all dust.
If for some reason you wish to remove the existing paint then a chemical stripper or heat gun will do the job.
If you attempt to remove the dado rail you will create holes in the wall that will need replastering and some pieces of dado will split asunder.
Peccavi, January 2010