you should paint it then seal it.Id do all the mods before sealing it as well.Been a long time since I did wood lures but I remember having to add some weight to the bottom to get it to travel right in the water.
yes I do have to add weight, what you do is seal it, paint it, then seal it with epoxy or another kind of clear coat. When adding the paint over the seal it makes it more smooth and glossy. If it were to go right on the wood it would be dull and not as clear.