I'm going to be painting luster dust onto hardened fondant decorations, but i don't want the dust to transfer onto my fingers when it dries and i go to place it onto the cake. How do i make this happen? Does 95% alcohol or lemon extract mixed with the luster dust help it to stick to the decorations even when dried? Does one work better than the other? I was going to use alcohol because i've read that it dries faster and doesn't leave an after taste.

Wave the dusted decorations  over a boiling pot of water briefly, just a second or two. The steam sets the dust.

So if i mix luster dust and alcohol, then paint it on and let it dry, then wave the piece over boiling water...it will set it?  Just want to make sure i have all the steps right 

Yes, it will :) Lustre dust dries instantly when you are using alcohol. The waving over the pot of boiling water sounds precarious. Better use a steamer or a kettle. Watch your fingers! And as you were told, just hold it over the steam briefly so that the fondant softens and absorbs the colour. Try it out with a piece of scrap fondant till you feel confident. Oh one last thing: best paint the dusts when your fondant is bone dry. If you do it whilst it is still damp, the colours might run. And be careful not to have a very liquid colour solution on a very thin piece of fondant because guess what? alcohol is a rejuvenator - so it restores the wetness of the fondant! LOL

Thank you so much!!  This helps a lot!  I was actually thinking of laying the pieces on something and flashing them with steam from my iron.

Lemon extract is superior for 2 reasons when painting with luster dust--first, the oil helps to keep the paint smoother, resulting in less streaking, and second, it does stop the dust from coming off on your hands after the paint has dried.   I use lemon extract most of the time for these reasons.

I was wondering about that!  Thank you so much!  Looks like i'll be using lemon extract instead!  Sounds much easier than steaming :)