Once you have sorted categories up to paperwork and are going onto miscellaneous, does it matter if you end up sorting by room? I know she says to avoid it but certain areas (e.g. loft/ shed), I couldn't really put into categories as can't even remember exactly what is in there! Can I just do each item at a time, putting any sentimental items I come across away until the end?
I don't think it does matter. Once you get towards the end you have 3 of the very basic rules firmly in your head.
Normally at this stage you are much more selective about what you keep. Know that things which are the same need to be in the same location And that you need to have an idea where that place will be as you go through.
I did my garage at the weekend. The randomness of the stuff in there meant it has do be done as one big Effort.
I've done everything as categories except the shed and garage for the exact reasons you've said.
However even within an area like that you can use the Kondo categorisation, eg when I sorted the shed, I put all of the flowerpots together so I could see which ones sparked joy and which ones could go.
It's worked very well for me using this approach, I'm now down to just the garage and some sentimental stuff that belonged to my late father. Everything else that doesn't move has been kondoed within an inch of its life.