taken from rcgroups forum,

An easy way (?) to remove the old covering WITHOUT ripping/tearing the
balsa underneath is: Carefully work a corner loose. Then heat the
"cote" with your heat gun while pulling it off. The heat loosens the
glue so the "cote" comes off without pulling any balsa with it.

K2R works well for getting the oil out of soaked balsa. Spray it on and
let it dry to a powder, then brush it off. THEN, heat the area with
your heat gun, and when cool reapply the K2R. Depending on how fuel
soaked the wood is, it may take several applications of heat/K2R to get
the oil out.

I would also suggest putting Sig "Stix It" or Coverite "Balsa Rite" on
the area (make sure you use the correct Balsa Rite for the type of
covering you will be putting on.).
This will not only help seal the wood, but is an adhesive so the
covering will adhere better.

http://www.rcgroups.com/forums/showthread.php?t=78031

You can read this book too

http://www.hobbylinc.com/htm/hig/higbok002.htm