I have installed cedar ceilings and usually leave them unfinished. Sanding will significanly lighten the ceiling. Cedar has a nice natural sheen to it, but can be made glossier with surface finishes and sealers. Urethane would be a good bet for minimizing darkening while bringing out grain.
The only way I can imagine sanding a cedar ceiling would be with a 4" palm sander. Its a bit awkward because it is overhead and dust will fall in your face. But the wood is soft and work should go fairly quickly.
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