Whats the best way to fix this so that it doesnt happen again? Obviously sand and paint right? What kind of paint should be used? Primer, paint and clear coat? Or is there something better? I was planning on opening the headlights to put in clear diffusers so I might do everything all at once.

 

strip paint off to plastic, and use some "VHT" or similar high temp paint (headlights get quite hot inside)...i wouldnt use plastic primer in this case as it will likely bubble again. Just high temp paint on slightly coarsed up plastic. No clear coat...