Q1: I've not used the Watco oil, but know a few who do the soak thing to increase the shaft weight. They use a PVC tube with caps, but one just big enuf to hold a doz shafts or so, maybe 1 1/4 inch, so it doesn't really take that much finish. They will often soak for several days, not just one, and the oil takes several days to dry, if it ever really does. I would still recommend a couple coats of polyurethane over it.
Q2: Make a light pencil mark on the shafts where you want the stains to meet and stain the sections with your chosen colors. The crest is only needed for cosmetics. With a little practice, you can freehand a pretty good line with the stain, or if you must, use tape. If cresting, leave an unstained section for the crest. Most crests look better with a white base coat.
Q3: The fancy dip tubes are pretty handy, but not necessary. The small tube with the bell top allows you to use a small amount of finish without having to refill once or twice per dozen. They are kinda pricey, but if you do a few doz, they are very worthwhile. The gaskets are only for use with the "gasket lacquer" finish. I prefer a good oil base polyurethane thinned about 3 or 4 to 1 For the occasional doz, a cheap golf club tube with a couple of rubber stoppers makes a very serviceable tube. Stopper it between coats and when done, return the unused finish to the can and toss the tube; it's not worth cleaning. Keep the stoppers for the next time. You can also forgo the dip tube and just wipe the finish on. Reg poly will work fine, you don't need the wipe on stuff. Always wear gloves.
Always be sure to have fun!