It is definitely easier to install the loops after varnishing. I also cut the slots after varnishing. I made a simple router jig and held it in place with double=sided tape and packing tape. And then cut the slots with an 1/8 inch router bit. The exposed wood was sealed with epoxy from a Q-tip. Fishing a piece of monofilament fishing line through the slot and tying it through the padeye loop and attaching the blase of the loop to a yardstick with double-sided tape make it a snap to get the loop through the far slots without losing any of the attaching caulk.

Dave