Progress has continued.  Not much posting because all I have been doing is sanding and sanding and sanding, and a bit of varnish.  All done with varnishing for now.  So far, I have one coat (thinned 50-50 Epifanes) on the gunnels and deck.  On the rest of the inside I have 4 coats.  Sequence: Sand 150 grit, 1 coat (50-50), sand 220 grit, 1 coat (75-25), sand 220 grit, 1 coat (90-10), sand 320 grit wet, 1 coat (90-10).  I think that is enough for now.  Perhaps another coat or two when it is time to do the gunnels and deck, but we'll see if I recover from sanding by then.  A few pics of the interior (you can see some experimenting with camera settings.  The better pics (top 2) are set on scene instead of auto (last photo), these I think are no flash):

Next up is figuring out how to canvas.  Much reading on the web - mostly led from the WCHA forum searches.  I am still planning on going with Dacron for the finished weight, relative ease of application and familiarity (from previous kayak and single rowing shell).  Drawbacks are durability (but I do not see heavy river use - mostly lake paddling), and showing surface irregularities (which will be unfortunate, but I'm going for function, not beauty...)  One good search is 'osberg dacron' which leads to a post chain 'Dacron on Old Town' - this chain has a lot of good suggestions, including using a second layer bonded to the bottom and using saran wrap (see below).  Another good find was a google search for Stewart River BoatWorks.  They have instructions for how they recommend applying Dacron.  (for later, I also found a post 'OldTown Design #4' that describes how to get the triangular pattern measured and painted...)

So, after culling through all the conflicting advice in the articles, posts and counter posts, here is my plan.

• varnish the outside with 50-50 (already done - this conditions the wood and makes it somewhat slippery so the dacron will not stick to it as the boat flexes and expands from temperature and moisture changes.  Traditionalists use linseed oil or other but it sounds like it takes a long time to dry and if not totally dry can soak through the dacron and messes up penetration and adhesion of the filler.
• I decided to forego the inner layer of dacron on the bottom (not up the sides).  This seems like a good idea, and I already have some light weight dacron from the shell.  But, it is also another step, and I do not see that much sand getting inside the boat to worry about getting between the planking and canvas.  I'll need to tell Nancy to rinse her feet when getting in...
• Next will be to apply the dacron.  I will use either, or both the heat-n-bond iron on glue and the paint on glue from Stewart Boatworks.  I had planned to use only heat-n-bond but worry if the weight of the dacron is too much for the iron on glue.  So, I got some of the paint on heat activated glue from Stewart Boatworks also, and I'll play around  with both.
• I also got the dacron from Stewart Boatworks.  For the kayak and shell, I ordered from Aircraft Spruce.  But, they have lightweight (1.4 oz/yd?, used for the shell) and heavy weight (2.8 oz/yd used for the kayak).  Stewart Boatworks sells 3.7oz.  I suspect it is coarser weave and may not be stronger. But, I suspect they know what they are selling and hopefully it will be best.
• Cover the planking with saran wrap.  This seems like cheating, but who will know (other than you who read this).  The idea here is to keep the filler from seeping through the canvas and adhering to the planking.  This would make all sorts of issues as the canoe flexes.  Hopefully, once the filler is dry it will not matter if the saran wrap moves around a bit.
• I plan to use the basic covering technique from the Stewart Boatworks instructions, although I may substitute the heat-n-bond, at least in places.  Also, rather than calibrating the iron to a given temperature, I plan to test iron some samples and set the iron for a given amount of shrinkage.  I hope to be able to calibrate the iron settings to:

     - low - enough to melt the glue but no shrinkage of the dacron
     - medium - about 5-10% shrinkage (1/4 to 1/2 of the expected max shrinkage of 20%)
     - high - 20% (max) shrinkage
     - too high - oops it melted

• The plan is to apply the glue.  pull and tug hand tight and attach dacron and get wrinkles out with low-medium iron, only around the edges to get good glue hold.  Final ironing on high to shrink to final tightness (and not pull off the glue...).
• Hopefully the method in the Stewart Boatworks instructions for the stems works as described.  (I do not plan to add the extra layer of dacron tape over the stems - seems like over-kill for the usage I expect and I worry about loosening the under layers of glue trying to apply the extra layers.  Besides, I expect to have stem bands to protect the stems.
• Next will be filling the dacron.  I bought the Ekofill from Stewart Boatworks.  Seems like much easier to apply than cotton filler.  Sounds like it should be easy to dampen the dacron and paint on a couple of coats of filler.  I only bought a quart, hopefully enough for 2 coats.  I plan to use it all and then go on to the primer...
• The forums sound like the Ekofill will not fill the weave completely (without more coats than I am interested in).  Another suggestion was to use something 123 primer (Zinzer I think, but the web site is down at the moment...)  This apparently adheres well to both the Ekofill and subsequent paint, and is thick enough to get a good smooth finish over the weave of the dacron.  I plan to sand with 320 between coats of filler and primer.  Sounds like dry sanding is the order of the day for this, so there will be some vacuuming and wiping as well...
• Then, paint.  I have not yet figured out what paint to use, other than it needs to be off white to match the previous paint scheme.  Sounds like it needs to be a good marine paint to have enough flexibility to handle the flexing the canoe will undergo.  I was hoping for a latex product (water clean-up), but most I have seen so far appear not to be.  More research yet to go in that area.
• One worry is if the dacron will pull when I try to put fasteners through it.  I will need to get through the dacron from the inside to attache the keel, and from the outside to attach the stem bands.  Hopefully new fasteners will slide over/through/past the dacron fibers and not pull and distort my (hopefully by then) beautiful paint job.

Well, that is about the size of the planning I have so far.  Many more steps here than sanding, sanding, sanding, so perhaps I'll have a few more frequent posts to fill you in on progress.

More cost info - adding up more than I expected...:
another quart of Epifanes $45
Dacron (7 ydsx72") + Ekofill (1 qt) + heat glue (3oz) - $200