I have metal rods, 2 mm diameter and 4 mm long that I have to polish so the ends are flat and perpendicular. Right now I’m holding them in a Dremel chuck and using a Black and Decker RTX 1 rotary tool to polish them on sandpaper, but this makes the ends domed, probably because I’m not holding the tool perfectly perpendicular.
Is there a better way? Would the Dremel Work Station (drill press) or plunge router help?
Your question answers your query. 
Use a drill press. Glue the sandpaper to a board, clamp the board to the drill press plate and ensure the board is perpendicular to the drill above.
I agree with using the drill press, but disagree with clamping the board down. The sandpaper will wear quickly in one spot.
But is the Dremel one good enough? Amazon reviews say it wobbles.
They are pretty light. But you shouldn’t be applying that much pressure, and it’s a very small surface area. You could make a jig out of wood or plastic to hold the piece, glue a strip of sandpaper to one inside face of a piece of metal angle, then slide the jig back and forth along the other face, pressing it aganst the perpendicular angle. You could also make the jig to run along the side of some flat material like 3/4" plywood, or any slot in the table of a tool like a table saw. The jig just has to hold the piece perpendicular to the sandpaper. (I assume you’d use aluminum oxide to start, then emery cloth to finish). This is lapping, sliding a piece along an abrasive surface at a fixed angle.
Emery is aluminum oxide, isn’t it?
Apparently yes. But the sand papers with the coarser grits that have sufficient hardness for working metal would usually be labelled as aluminum oxide, and emery cloth would have finer grit. (I should have had the curiousity to find this out since I used to live around the corner from an emery mine).
In optical work, if you have to grind and polish a small surface without rolloff on the edges, you embed it in a larger surface.
Make yourself a larger disc or plate with a hole just the size of your rod in it and attach it firmly in there with a set screw or something. This will hold the rod perfectly flat against the grinding surface with less tendency to “roll” on the edges.
In extreme cases, you actually do embed the part to be polished in a plastic or wax mount that’s later removed.
They do this for polishing the end faces of fiber optics, too, especially if they have to be at a particular angle, instead of perpendicular. Here’s one such device:
I was afraid I would have to do that. I actually have a solid stainless steel holder made, but I can’t figure out how to use it - if I grip the sample flush with the holder’s surface, grinding is ridiculously slow. If I make it stick out a bit (barely visible to the eye), the surface won’t be flat, and eventually the holder’s surface won’t be flat as well.
Using the jig method, would I be polishing by hand?
Oh, no wonder Dremel’s emery wheel doesn’t say what materials you can use it on. I always thought emery would be too soft for glass and the like.
Yes. But it’s way to get things absolutely flat. Unless you have precision machinery.
Only diamonds are harder. (among natural minerals I guess)
I’d use a polishing paste on a piece of plate glass as the lapping surface.