Here's some advice from a guy who has maintained a custom built wooden boat for the past 19 seasons and back in the 1960's helped his father maintain a series of wooden boats:
(1) Buy wood finishing supplies from a knowledgeable firm like Jamestown Distributors, Inc. in Jamestown, RI. Their printed catalog is very educational. Request a copy. Can now order on-line at
www.jamestowndistributors.com Forget Home Depot. The only thing I buy at Home Depot is bags of shop rags. Home Depot sells low quality stuff at low prices. If you're going to spend precious time making fishing lures by hand, finish (coat) them using the right materials.
(2) Don't even think about using anything water based on a wooden lure. Use only oil based primers, paints, varnishes, etc. I use EPIFANES oil based varnish and ZINSSER, INTERLUX and Z-SPAR brands oil based marine paints and primers on my boat. You won't go wrong using oil based marine paint on wooden plugs.
(3) I've had good success using a lead-based enamel (I know lead is Verboten) on Cedar Plugs (tuna lures) I troll and cast for bass and blues (ask Flaptail) . I buy "ONE SHOT" brand Sign Painters oil based paint and clear coat from PEARL ART SUPPLY, Central Square, in Cambridge, MA. (I think PEARL may also be on-line.) In the 1950's my Dad used lead based enamel paint when painting our house. Lead-based paint worked great. Stood up to abuse. If you use lead-based paint just don't chew on your lures. Let the bluefish do that.
(4) I don't know much about epoxy-based coatings (despite the fact that I am a chemist by education) but I have successfully used BONDO MARINE epoxy filler (similar to BONDO auto body epoxy filler but designed for underwater applications) for fairing the hull of my boat and for filling in dents in the planking. This stuff lasts for years. I suspect epoxy is the ultimate coating for wooden fishing plugs but I don't own my lures long enough to bother with two-part epoxy coating because of toothy bluefish.
(5) Good luck!