You shouldn't be sanding into the paper surface at all. Going through it will be even worse and destroy the structural integrity of the sheetrock. What exactly are you trying to accomplish here?

I am trying to get rid of the rough surface on top of the sheet rock. It looks like it was formed due to the moisture in the joint compound. Once it dried, it was sandable to a reasonably smooth surface. I was thinking of using shellac to fill in the minor texture, but the joint compound applied on a dry surface does the trick.

Here is what you want, need, not shellac

http://www.zinsser.co.nz/wtb-GARDZ.asp?SID=11&WID=27

Here is a link that might be useful: gardz

If the paper gets fuzzed up, wipe it down with a damp sponge, then roll on the primer soon thereafter. The remaining fuzz will be very slight and will sand off easily.
Casey