can you polish or lightly sand the area at the end of the barrel breach side which is kinda of rough

Of course you can, but whether you should or not depends on the specifics. Pictures would help. Using sandpaper or crocus cloth without a sanding block is not advisable. Usually a Dremel is better.

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Assuming you're talking about the barrel extension, I don't really know why you would want to smooth it out. Whatever tiny bit of friction you might get from there is not going to affect the pump gun's function, if it's even noticeable.

870s can be rough out of the box since they're designed to go together with virtually no part fitting, but they smooth themselves out as you use them. If there's a sliding contact point that's creating friction, the roughness wears down only where there's actual contact. If you try to polish it yourself with sandpaper or a dremel, you may take care of the actual source of friction, but you'll also probably strip away a lot more finish or surface hardening than you need to. Unless you're actually getting function problems, or you're going to be refinishing the parts you're working on anyway, it's best to let an 870 run in naturally.