I think that your main problem was the dullcoat wasn't thinned enough. I have always thinned my paints 60%, meaning 60% thinner. I also shoot at slightly lower pressures, this allows a coat of paint to go on much smoother. I can also apply a much thinner coat of paint as well. Must work, as I've painted professionally for over 30 yrs, and have had only one complaint, and that we tracked down to a brass alloy that had a high acid content in the alloy itself. A repaint with Automobile Lacquer fixed that.
As to the blushing problem, I've found that if you spray a coat of glosscoat over the dullcoat, the blushing goes away. Since it was Testor's Dull coat, you must respray with Testor's Gloss coat. Then you can apply another coat of dull over that.