RE: Painting Balsa?
I use 1/4 water, 1/4 Baby Powder (Corn Starch is ok), and 1/2 cheap (I mean cheap) flat latex paint. The flat latex will help with bonding the corn starch and will wet sand perfectly smooth. However, water and latex will raise the grain substantially. Another great method that will not only seal balsa, but harden it as well with out substantially raising the grain is a 3 lb cut of Shelac with Baby Powder. Use a fine brush because you will leave brush strokes in the shelac. Let dry for at least a 2 hours between coats and at least a day between sanding. Start with 320 and work your way up. Shelac sands best dry, and watch for build-up on the sand paper or you will mar the finish. Shelac is NOT fuel proof as it will desolve with alchohol.
Balsarite is also excellent or finishing resin.