What is the case where someone uses oil first and then applies varnish?
I have never looked at varnishing for anything other than making varnish this past year and putting it on guitars, but from the instrument maker's perspective, cutting apart violins and seeing that the oil has penetrated further into the instrument caused people to conclude *not* to use it.
The case for instruments is different, though. In violins it has been for a while - affect the stiffness of the wood as little as possible (so no penetration of oil is better). This is making its way into guitars now as buyers have started to prefer harder and thinner finishes, but buyers are uneducated about just about everything in guitars other than what they're told to look for.
I know a guy who is building kits from a canadian CNC wielding firm and then making them with all of the old school buzz words ("super hard lacquer, long tenon neck, hide glue neck pocket"). He's convinced of what he's saying, that the lacquer he uses is super hard (but it's just behlen stringed instrument lacquer), but I doubt it's much different than any others. Each time he makes an instrument, he tells me of its virtues and then he markets it and he does pretty well. About $500 for a part-time week of hobby work assembling the kits, dying them and finishing them. Nice guy, but I'd guess most of the differences he perceives or thinks he's seeing are variations in electronic components in the guitars.
As we've seen with salesmen before - it's often better for a salesman to believe what they're saying than it is for them to know what they're talking about.