Yes, the wood top gas tube cover is original. Great that you have it!

Obviously it's your rifle and you can do what you want, but sanding is not something you do to "restore" a rifle like this.

It really doesn't look bad in the photos AT ALL. Why sand and re-finish?

If you are determined to re-finish it, get some Citristrip to remove the original finish (I can't believe I'm giving advice on how to ruin a collectible SKS!) and then use an amber or clear shellac. At least it would still have somewhat of an original look to it.