Wood finishes for model ships from the point of view of a Carpenter
I hope that the few bits of information I can pass on here may be of assistance to other modelers.
As I stated in my reply to Cravens' post, Wood finishing, there are more considerations than just the color or finish being applied.

Note: Before starting to apply any of these finishes to your model, I would suggest testing the application to a "Test" block first. It may take a little more time, but it's a good way to see how the final finish will look before you apply it to your "Work of Art". Don't feel like taking the trouble, read - An example of what not to do!

There are many wood finishing products available. They all have good points and bad points.
The most common finish types:
Polyurethane comes in multiple forms: interior, exterior (spar), and "poly-shades" (pre colored polyurethane). By its' nature it is designed for interior use only, with no exposure to sunlight. Over the years the formula has been modified slightly to be a little "softer". Polyurethane in its usual form is a very hard finish. As wood moves, the polyurethane "shell" doesn't, therefore causing small cracks in the finish. Not that these cracks are not visible at first. Over the course of years the cracks will enlarge and the finish will literally peel off. Using it on a model is not really a concern unless your model is exposed to sunlight which will increase the speed of the finish failure. One other thing that can speed the demise of your finish is the combination of sunlight and humidity change. (Think model sitting in a window). The UV exposure will speed the breakdown of the polyurethane and the direct sunlight exposure will cause the model to expand and contract unevenly.
Spar Polyurethane is designed to be used on an exterior application. This being said, it is not UV proof, only UV resistant. If you put spar polyurethane on your front door you will still have to recoat every two years. Will work good for a model, but spar is classified as a "soft" finish, meaning that it moves. Not moves in the sense that it runs, but a soft finish never the less.
"Wipe-on" Polyurethane. All Polyurethane is wipe-on. They may be applied by brush, rag or spray. The method of application determines the drying time and the end result. Spray-on is good for quick recoat times, but takes longer to build up a protective finish. As a rule, spraying losses 50% of the material to the air, not counting how much you have to dilute it to spray. My personal preference is to brush. Better coverage and polyurethane, as a rule, is self leveling, meaning brush strokes go away. The "wipe-on" poly's that need attention are the pre-colored ones, Minwax's Polyshades is one such. The problem with there is that, due to the pigment added, the amount of polyurethane is less. Also, to darken the color, multiple coats are needed, with steel wool needed between coats. The steel wool is needed to rough up the surface so the next layer of polyurethane will adhere to the previous coat.
"Quick drying" Polyurethane. These are good for a quick recoat time, but, you will need to coat at least three times to get the same coverage one brush coat of normal poly will give. This is due to the amount of polyurethane versus the amount of carrying agent.
Type of Polyurethane finish. I prefer to always use a gloss. This is because the gloss has only clear pigments in it. The semi or satin have an additional pigment in it that causes the satin or semi-gloss effect. Apply a gloss finish, then scuff with a 4000 to 6000 grit sandpaper. One such product is called "Micro Mesh"
Shellac. It is not really a finish I would consider using for a model. Shellac is an exceptionally soft finish also being affected by oils in the hands that degrade the finish. Good for a sealer for a furniture builder, but, there are better products out there for model builders. Shellac does make a dynamite sealer to stop bleed-through. This occurs when you paint say, white over black. The white will take many more coats to fully cover. Instead, think of sealing the old paint with shellac first. Shellac is also fast drying and non toxic when dry.
Varnish is roughly the same as shellac, more durable, but still a soft finish. I have had very good success with it on my furniture, but have yet to use it on any model I have built.
Oil finishes such as Tung Oil is my finish of choice here. It is a oil that hardens when exposed to air. The difference being, the tung oil soaks into the wood fibers before it begins to harden, thereby forming a protective finish that moves with the wood. Actually, a very good finish to use.
Coloring: Stains and Dyes. There are no stains or dyes out there that are UV colorfast, but all are UV fade resistant to some degree. That is not to say there aren't any, I just don' know of them. UV resistant means will it fade when exposed to sunlight or some artificial lighting. The amount of fade is directly proportional to the amount of sunlight that the wood receives. The more light, the more color change. Most finishes fade, but, most woods darken. Cherry and Poplar are two of the best examples of this. I have two pieces that I made from poplar in my bathroom, both being approximately three years old, and you can tell when you take the towels off the towel bar, the color change is obvious. Keep this in mind!
Stains. If you plan to stain your wood, a trick that I learned, before you stain anything, rub it with denatured alcohol. This gives you a very good idea of how the wood will appear when a clear finish is applied. If you stain with a oil based product and then apply a oil based finish, there is the slight possibility that the color will "pull", that is lighten in some areas and darken in other areas. This is because the carries for the sealant is lifting the color from the same carrier that the color used. The way to avoid this is to use a water based color and oil based finish or the other way around.
Dyes. There are two different types of dyes available on the market, water or alcohol base. These dyes are dissolved in the product they are designed to be used with, that is water for water dyes, alcohol for alcohol dyes.
Both of the dyes are very easy to use and are so very easy to control the color by varying the amount of powder you mix into the carrying agent. When choosing a dye type, the size of the area to be dyed is a limiting factor to what type of dye you use. If you are doing a small deck area, say 6 square inches or so, you can wipe on an alcohol dye to achieve a good even color. If dyeing a larger area, water based would be a better choice. This is due to the very fast drying time of the alcohol carrier. If you do not keep a wet edge and sometimes even if you do, the color will give a blotchy overlapped appearance. If you use an alcohol based dye, it is best to practice on a scrap piece first!!!! The only issue to remember with water based dyes is that without surface preparation, the grain will raise, giving a fuzzy look. This can be cured by wetting the wood first, letting it dry and then sanding it with a 220 grit sandpaper. Then when the dye is applied, it will not raise the grain.
Wax. It protects the wood, doesn’t show fingerprints and can be made as shiny or dull as you desire. To apply wax, two concerns:
1 thin layers are better, and
2 the more shine you want the faster you have to rub.
It is the friction against the surface of the wax that creates a high shine. To get that “bottomless” shine, multiple layers of wax shined to a high gloss each time will achieve that effect.

Painting over other finishes. If you apply polyurethane, or any other finish, to your wood and then decide you want to paint it, you must first "scuff" the surface so that the paint will adhere. This can be accomplished by sanding with 220 grit paper. This will assist in the paint adhering to the previously applied finish. Although, I do recommend trying a test piece first, there still may be some adherence problems.

Brands of finishes that I prefer:
Polyurethane: Minwax gloss
Stains: Minwax Oil based stains
Dyes: Water based - Homestead Transfast (available from Woodcraft stores nationwide or online at www.woodcraft.com)
Oils: Tung Oil. Always get the pure tung oil, it can be thinned, but I use it straight. (Woodcraft also).
Shellacs: Zinsser Bulls Eye Shellac. Clear or amber, either is fine although the amber will add warm yellow tones to your project. Available from Woodcraft or Home Depot.
Wax: (Both available from Woodcraft).
Briwax. A good clear wax with a cleaner agent as well.
Renaissance Wax – a very good quick drying wax that buffs out very well.
Varnish: As stated above, I don't have much experience with varnish on models. So you may want to try different brands here to find one to your liking.
A note about cleaning up and storage. Here, basically common sense. Some of the finishes mentioned in this article may be flammable. Use caution when using, applying, storing and cleaning up afterwards. Best to follow the manufacturers' recommendations. And, one more thing. Be sure to use adequate ventilation when using these finishes and store them in a cool, dry area away from any source of heat or flame.
I hope that this information helps with your selection of a finish for your project. If you have any questions, please feel free to leave a post in the Forum, or contact me directly. - flywater
An example of what not to do!
Now, having said all of the above......
Thought I would share my recent bad experience.
After finishing the deck on my current model, the Charles W. Morgan, I decided to tung oil the deck. The deck looked good after applying 4 coats, but with no sheen. So I then decided to apply 2 coats of gloss polyurethane. Now the deck looks great for a yacht but not for a working vessel. So, after much sanding and sanding, I couldn't get the deck to the sheen I had wanted. I then decided to apply Testors Dullcote Lacquer (oil based) over the H2O based polyurethane. About 10 minutes after applying the lacquer, the surface began to scale. A few minutes later, it looked like fish scales! A few words left my mouth when I saw that! After 2 hours of hard sanding the deck got back to the way I wanted it to look like in the first place, a low sheen that is sealed. Be careful how you use your finishes.
A hard learned lesson from the teacher! Please read this note. Again!