It's unlikely the inside is hazy, unless there is moisture in there. Polishing is a way of smoothing out a surface. Unless the inside somehow was abraded, you should not worry about that. If there is moisture in there, the whole light unit probably has a leak in it somewhere. If that is the case, you may need a new unit, or maybe try to seal the leak with silicone, keeping in mind that would seal any moisture already in the unit.
Depending on the age of the headlight and any "road rash" it has seen, it could just be it needs more polishing. I've used a few things to polish the headlights on my A4 with varying levels of success. FWIW, my lights had 190K miles on them last time I did it.
http://forums.audiworld.com/a4/msgs/2690386.phtml