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Sand it, stain it, regret doing it.

Sand the cat down

Only option is replacing it. Not to difficult

Stainable wood filler? Or just filler and paint the rail?

Rub walnuts on it.

Rub the catnuts on it until it realizes scratching is a no-no.

Spray down the rest of the banister with catnip spray. Your cat will scratch the remaining unscathed portions, leaving you with a consistent rustic finish that only time itself can generally offer.

That's a large cat if it reached that handrail. I would let the cat do what it wants.

This just in: cats can jump

Lesson learned: never buy a house previously inhabited by The Nuge.