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Finishes

Your friends seem to have it backwards regardless of which does a better job of enhancing the grain. Oil is supposed to be applied to clean bare wood so that it can soak into it. If a film finish whether it is shellac, varnish, lacquer, or whatnot is applied then the wood is essentially sealed and the oil would only sit on top of the film finish and not really contribute any useful purpose.

The results of using oil or a film finish depends a lot on the species of wood and whether or not it has any figure. It also depends on what type of oil used or what type of film finish. I think that everybody has their personal preferences for what they like to use for various species of wood.

Sometimes an oil finish will make wood look drab and murky and other times it does wonders. Shellac seems to be excellent for bringing out the figure in wood and is sometimes used as a first coat before applying a varnish finish. The reason is that shellac does a slightly better job of enhancing grain than varnish does. It also adds a nice warm amber glow to the wood.

If using shellac before varnish, it is advisable to dewax the shellac by filtration before applying it. I use super blonde shellac flakes which are supposedly dewaxed, but I still find it necessary to do my own dewaxing by filtering before using it.
 
Some of my friends are sealing their projects with Shellac before applying oil. I maintained that shellac does not pop the grain like oil does. Am I wrong in thinking that..

Your friends appear to be following good procedure for staining of projects with pigment stains. The shellac somewhat reduces the tendency of end grain to accumulate excess pigment. Wouldn't bother staining turnings, though.

As far as "popping" the grain, it's one of those common phrases that don't mean an awful lot. When you put that coat of oil on it looks real nice - until it sinks in. Should cue you that what's happening is more about replacing scatter from an irregular surface with the transparency of a regular one than the modest amount of color that an oil adds. This is one of the times we can prove the negative, because we sometimes cut the gloss with abrasives to reintroduce surface scatter, or use satin finishes with silica additives to scatter light within the finish. Both reduce the contrast available in the wood. `Some increase the contrast by using dyes to accent differences in absorption, followed by clear finishes. No oil at all, but high contrast nonetheless.

Several coats of shellac will build a smooth finish and allow differences in grain direction to come through uninterrupted. Pretty easily done with small looker pieces.
 
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