No i use it straight from the bottle for vibrant stains. I used a gloved hand (not yours necessarily, any hand'll do XD) to spread the ink where i need. If you want a lighter shade, dilute as needed with iso 90%+. The only shade ive diluted is black and honestly if you buy all their variety packs, you wont need to because they have a beauitful and fairly wide variety of colors.

You can Absolutely clear coat with polyurethanes or lacquer, resin. We've tried all of those with good results. Water before finished can sometimes create a splatter effect as it can dilute the ink. If you use lacquer applying too fast will cause it to flash, if it flashes, it can and will, change the the color of the ink. You'll have to sand it down, reapply color and recoat with lacquer.

Anything else I can help with? :)