I am coming a little late to this conversation, but I'll throw my two centavos worth in for others considering the same problem.
Harry's comment about the dollar-thin gap goes double for a gun that has a bipod or which you will use with a sling. The stock’s for end is flexible and will bend some in either of these situations; up for the bipod and sideways for the sling in some positions. You need to be sure you have enough clearance that this flexed wood doesn't touch the barrel. So, when you think you've removed enough wood, have a friend re-run the clearance test while you try your positions. If you clear two cards when the stock is held by the grip or butt, you still want at least one card to clear when you are in positions.
A tooling suggestion: If you have a flexible shaft tool, one way to quicken the sanding process is to use it with a drill-type drum sanding attachment. Sears sells a set with 1/4" shafts. I used one in my Foredom tool to whittle out the lower hand guard for a Garand I was fitting with a heavy barrel. It took maybe two minutes to complete the major cutting. Finish sanding, then applying a finish were all that remained. The reason for the flex shaft tool is it's handle is narrower than the rubber sanding drum mandrels. This lets you snug the side of the drum cylinder up against the wood without interference.
Making wood water and humidity proof is a real job. Back when the U.S. Army Marksmanship Training Unit still used M14's, their armorers started with sap wood free unfinished walnut stocks. These were placed into a pressure vessel, heated to 300°F and evacuated for an hour to remove all significant moisture. While still at this temperature, the vacuum was allowed to draw in an epoxy resin. The vessel was pressurized to 100 PSI for an hour with dry air, then the pressure was slowly released. The stocks were removed (presumably excess epoxy was wiped off) and then put in a curing oven for three days to further flow the epoxy into any sap pores and cause it to set and cure. The result was a kind of cellulose-epoxy composite. I don’t know what epoxy resin was used? It would have to be a very slow heat-cured material with no thinning solvent. I don’t know what the final stock weight was? The MTU manual (U.S. Printing Office 1980-740-000/105) says the final finish was “a desirable dull finish, having better concealment characteristics than a normal stock”. They also recommended carbide cutters be used for any inletting for bedding material. Apparently the epoxied fibers dull steel tools.
So, assuming one isn’t equipped to undertake the former procedure, I will throw in two other suggestions: I have taken to using Deftoil Danish Oil Finish for finishing most stocks. This combines tung oil with polyurethane and thinning solvents that allow it to penetrate much more effectively than a straight varnish. A friend who is a cabinet maker put me on to this product applied as follows:
After finish sanding, apply the first of three coats, rubbing it in using 320 grit wet/dry sandpaper as the applicator. This raises the wood fiber and aids penetration. Once the wood is thoroughly wetted, use a brush to keep applying the product until the surface has remained wet for half an hour. Wipe off any excess and let it stand an hour. Apply a second coat with 400 grit wet/dry sandpaper and again keep the surface wet for half an hour, wipe dry and let stand an hour. Apply a third coat using 600 grit wet/dry sandpaper, and again keep it wet for half an hour, then wipe it as dry as possible. After the final coat, check every hour or so to see if more excess has come to the surface and wipe that off, too. Excess that is allowed to dry makes the finish uneven and is a pain to clean off and achieve a good looking result with.
This finish allows you to make subsequent surface finish application with Defthane after the final Danish Oil Finish has cured 24 hours. My personal preference doesn’t favor glossy exterior finishes, but using the glossy Defthane inside the stock for extra moisture resistance wouldn’t hurt if you are going to carry the gun into wet weather. Keep in mind that no polymer has a zero water permeation rate, so you will want to remove your gun from its stock after a wet excursion and dry the stock inside before putting it back together.
I should add that I usually put a stock I am going to finish into a heavy polyethylene together with a large pouch of color indicator desiccant. I let it desiccate in the bag for a month to get deep water out. The value of desiccating it is to maximize the wood’s ability to absorb the new finish. I make the bag by heat sealing 6 mil PE sheet I get in a construction roll from Lowe’s. I don’t open the bag until I have the finish out and ready to start going on immediately after cutting it open. I don’t do this on a humid day.
Another possibility: If you are only sealing the wood where it can’t be seen and you don’t have to match an exterior finish, go to West Marine or to Woodcraft and pick up a small kit of System Three Rotfix or of the West Marine store brand rotted wood repair resin. These resins are two-part epoxies that are water thin. They are designed to penetrate the fibers of rotting wood and adjacent un-rotted wood fibers to halt moisture damage, harden the soft fibers and secure them to any remaining good fibers. These products also penetrate good wood fiber better than any other type of surface applied epoxy I am familiar with. Mix some and keep the surface wet with it until is starts to thicken. Wipe of the excess and let the rest set up for 24 hours.
Nick