You don't have to seal the wood before covering with tissue, but ir makes for a smoother finish. If your plane is for display, I highly recommend sealing it, since you dont care about weight, but you do care about looks. Thinned white glue will do fine for sealing the wood. Brush it on all outside surfaces, allow it to dry, then sand with very fine sandpaper to remove all of the fuzz and leave you a silky smooth surface.

I recommend the glue stick for attaching tissue dry. The one I've had the most success with is the Avery brand. It's a yellow and pink label. It has sufficient "tack" to hold the tissue in place, but dries slowly enough that you can make adjustments and smooth out wrinkles. Trim the edges, i. e. the leading and trailing edges with sandpaper, and the seems will disappear with the water mist and paint.

I've painted a display model with craft store acrylics. Looks great, goes on easy (just not fuel proof)!