Since no one else has answered:
What you'll need is a good furniture stripper, a sanding block, and sand paper.
Most any hardware store will sell furniture strippers which are used to remove the old finish without altering or damaging the wood.
Just follow the label instructions to strip off the original varnish-type coating.
Buy a sanding block and sand paper at the hardware store.
Use the finest grade of paper you can, to prevent over sanding.
ALWAYS use a sanding block to keep the surface level, and always sand WITH the grain.
On laminated wood simply sand from front to back.
Sand the wood only as much as necessary to smooth it up and remove factory sanding and machining marks.
STAY AWAY from the areas where the wood fits against metal, like the areas around the receiver and the butt plate.
This is to prevent undersizing the wood.
Do not round off sharp edges, or dish out the wood around holes or sling attachment points.
Once the wood is reasonably smooth and even, you need to decide what you want to do about the color and the surface finish.
Most people stain or dye the AK wood to look like one of the Russian or European AK's.
These colors range from the Russian Red-Orange, to a dark Orange-Brown, to a light blond.
There are a number of methods of coloring the stock, ranging from using MixWax PolyShades stain and finish, to using liquid RIT clothing dye, to standard wood stains, to leather dyes, etc.
Here's some online info for staining and finishing AK wood:
http://ironwooddesigns.com/1howto.html (Complete instructions).
http://www.ar15.com/content/page.html?id=198
Basically, after you have the wood the color you want, you need to apply a finish coating.
The AK is usually finished with a satin coat of Spar Varnish or Polyurethane.
Spar varnish is the most durable, but takes a longer time to dry.
Polyurethane is very good, but if the wood is very oily, it may not want to dry properly.
Thin the first coat of finish with whatever is recommended to allow the first coat to soak into the wood.
Usually, you get better results if you slightly thin every coat to allow better brushing and a smoother finish.
