Water based gloss is rubbish. Solvent based is where it is at but then I’ve never formulated a water based paint only ever done solvent and solvent free stuff. Yellowing has very little to do with the water/solvent – it is the resin chosen – polysiloxanes are normally considered the best for gloss and colour retention but they don’t make it onto the consumer market.
A thorough sanding is better, particularly around any detail (if you have panels). You don’t need to go back to wood but it needs to be smooth – any defects will show up. The quality of your substrate will have a large impact on the quality of your finish – so it is worth doing well.
My personal preference would be for a solvent satinwood. The less glossy the finish, generally the better it hides any defects.