An update: Thanks to you, even I got into doing the headlight buffing thing! 
We had an old two wheeler with us which had a faded headlight reflector. Also I had some basic materials lying with my tools so the task of getting them was done. The lens was almost opaque and slightly yellow due to ageing. Also, didn use any special stuff for the job.
Firstly, It depends upon what has exaclty happened in the reflector. If its dirty from inside due to dust etc, you will have to get it opened.
Lets come to the process. Materials I had was:
1. 3M Sandpaper of 2000grit - Costs around 15bucks.
2. A bunch of cotton waste or some pieces of cloth for wiping, etc. Remember these have to be fine and soft - got them for free.
3. A good wax polish or any such car care product which can both clean and shine. I had Sonax car polish.
So took these things and went down to the test mule. First, examine the surface. Feel it with your hands. If they are rough, with some peel off particles, then this will be the right thing to work upon. If they are smooth, and seem like the damage is done on the inner side, then get back home.
Use some masking tape if you feel that the surroundings will get damaged. Cover the border areas like in the video. But with 2k grit paper, damage is not done to paint and if there is any, use of polish will solve the problem.
Next, take a quarter of the sandpaper, and dip it in water and gently, without much force, start rubbing the headlamp slowly. Remember, you wont get results immediately. It takes some amount of work. Also, if you try to apply force, you might end up doing excess of sanding, which will do more damage. Keep the samdpaper and surface wet at all times, This will give a lubricating effect and will make the buffing smooth.
After that, your reflector would have either turned more figgy or opaque. Now, on a small piece of cloth, apply polish and start rubbing the surface with circular movements, WITH a lot of pressure(not to the level of breaking the cover!). This will take a lot of time and force. Rub the surface applying more and more wax everytime it seems to get over. This will slowly bring back the shine and the transperancy of the cover. The more you polish, the better it will become. If its not entirely clear, do one more round of rubbing with sandpaper and repeat polish.
Remember, this can only work if the outer side of the cover is damaged and will not work if inner side is damaged. And thanks to the link, things got better here! Will post pics soon.
Where there is a wheel, there is a way!
