I don't know the practical aspects of refurbishing aluminum cylinder walls, but I do know the theory behind it.

The aluminum casting alloy used to make these blocks is called hypereutectic aluminum-silicon. That means many large silicon particles are in the alloy. This makes for excellent wear resistance, but is difficult to machine compared with cast iron. After the final machining is performed on the cylinder walls, they are etched to remove just enough aluminum in the alloy so the silicon stands proud on the surface. The piston and rings ride against this hard silicon. This is what gives the superior wear surface. An added benefit is that there's enough room on the surface between the silicon particles to hold oil necessary for lubrication.

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95 E320 Cabriolet, 169K