I plan to "vag" varnish a kayak soon too. I'll leave the 25 word summary to those who've already done it. This will be new to me. But if you have access to the August 2000 copy of Fine Woodworking, you'll find a good description of the technique, using faster drying furniture varnishes and non-textured paper towels.

If you don't yet have your varnish and don't mind spending top dollar, you might consider Detco's Crystal marine varnish. Read about it at www.detcosterling.com. I got some through West Marine. Detco makes some of the finest marine paint around (under the Sterling name). A guy I trust at West Marine recommended it to me for rag varnishing. What appeals to me about it is that it is a good cold weather varnish (with the cold weather thinner; it evidently is very good in warm weather with the warm weather thinner). It can hold up when thinned enough for rag application. It drys faster than most marine varnishes, and a second rag-applied coat can be put on the first within hours. No sanding is required between the initial coats, if done soon enough, until the first four or so build up coats are on. The web site has good technical and application information, in case you're interested. Like I said, I haven't used it yet, so I can't yet speak from direct experience. But the company's reputation in the marine industry is top notch, and based on what I've learned about the product, I'm looking forward to trying it (which I hope to be doing by Sunday or so).