Jim:
My thoughts:
Warping the balsa. I wouldn't expect the balsa sheeting, held in a death grip to a foam core by Gorilla glue, to warp, but I share your concern about what a product might do if it is first coat applied to balsa built up structures. I applied seven products to 3/32 x 3 x 6 inch balsa sheet and noted the results, summarized on the attached. (AQ x119 SS is sold over the web by AquaCoat, as a waterborne sanding sealer; MWPU is MinWax Polyurethane, solvent based, and I used their wiping version.)
I thought I might see some real distortion to the balsa sheeting, probably some "curling" across the 3 inch width,
but really the only distortion was what I have labeled "curving", meaning the long ends raised up from the surface on which the sheets, or, the opposite, that the middle of sheet raised off the surface while the ends stayed on the surface.
Only the Zpoxy finishing resin and the MWPU did not curve/warp the balsa before drying. Only two of them left the wood curved/warped after they had dried: the AQ waterborne sanding sealer (only after two coats were applied), and the AQ waterborne "lacquer" to use their label terminology.
Every one of them, with only one wiped coat, was sufficient to cause water drops to bead on the surface after the coating had dried.
Here is an upshot. Despite the permanent curving caused by a second coat of the waterborne sanding sealer,
if I used it after sealing the balsa with a single coat of nitrate dope, it caused no problems when I used it on built up balsa structure. I have found that the X-119 product, when applied after a single first coat of nitrate dope, fills the weave of .7 ounce fiberglass cloth in three coats (with a brush), and I like it. I have used WB Polycrylic and found I need 6 or 7 coats to fill the same weave, even if I have added talc to the Polycrilic. The X-119 can be sanded or recoated after 30 minutes to 1 hour so you can fill the weave in one day.
Like you, I want to get away from solvents that can give you a headache or do worse. To the extent that "smell" is an indicator, I subjectively evaluated the odor of the drying product as seen on the chart. As you can see, the fact that a product is waterborne is no guarantee it will not stink.
Waterborne primers. Every "latex" (meaning waterborne acrylic) I tried, except Rust-Oleum "Ultra Cover", would not withstand wet sanding. I could not avoid brush marks with any of them (save an aerosol product) even thinned with water or after adding Floetrol. I could do a little better with a foam brush, but that required I follow up, quickly, by "tipping" with a high quality "tipping" brush to minimize brush marks and bubbles. A waterborne white primer from AquaCoat was highly tolerant of wet sanding, but brush marks and uneven coat thickness meant you wound up sanding off most of what you put on, even on an otherwise very smooth surface. I hold out no hope for this type of primer.
I tried SystemThree Silver Tip Yacht primer, waterborne 2 part epoxy, with mixed results. It wet sands nicely, but once again I had brush mark problems, and overlaps etc using a foam brush. I will probably experiment with this further. It "cures" in about two days. It doesn't have the strong smell of other epoxies I have used, but the instructions emphasize that you must wear gloves to avoid skin contact.