OK well I used the Meguiar's 3-step system yesterday (which is great, my car is sooo shiny now)
Anyways with the first step and second (paint cleaner, polish) it was rubbing off the paint!!! I mean the whole towel was red when I was finished! It didn't happen on the newer painted sections so could it have been rubbing off oxidized paint? For example my trunk was so dull you couldn't see your reflection but now it's really really shiny...
it scared the crap out of me anyways...but it was worth it.

 

YES...that is EXACTLY what you were doing....removing oxidized paint, maybe just a TINY bit more...but that is how it works.

 

What 3step system!?!? CAn I paint my car too by myself????? Please tell me.. O_O

 

The Meguiar's 3-step system you can get it at any automotive store (Canadian Tire here...)
It consists of a Paint Cleaner, then Polish, then Wax. Made my car extra-clean and shiny, and got rid of a few light scratches and swirl marks. What was really impressive is that my brother's civic had a huge ugly surface scratch on his hood, and it's not there anymore! And obviously it removed all the dull, oxidized paint from my car (guess there's no clearcoat on these things)

Painting your car yourself? I wouldn't attempt it unless of course you are a professional

 

makes sense, I see that you have a 92, not until recently, red paints are NOT clearcoated, that's why you actually have paint in your towels when you polish

IIRC, the 99 Pros in classic red paint weren't clearcoated either...