You can't, is the simple answer. If you want a nice defined line between the painted and polished parts there is always going to be a line you can feel. There are certain types of masking you can use to minimise the line, but then it won't be as defined and neat. You could also lacquer the whole thing which would help but you will probably still feel it a little.
As for peeling, I wouldn't worry too much about that underneath the bonnet. Paint only peels off the bodywork when it's agitated by something like weather/washing etc, under the bonnet it should be pretty protected. As long as you use paint that can withstand the heat.