Hi Twelvebar: I've not used Stew-Mac's system due to the absurd cost of shipping tins of lacquer internationally, but my understanding is that it is waterbased throughout:

http://www.stewmac.com/shop/Finishing_s ... quers.html

Incidentally, on another page they also have a waterbased grain filler. I use a different brand but I vastly prefer the waterbased grain filler over the oil one. No worries about leaving too much on: at any point you can take a slightly damp cloth to it and "reactivate" it, then gently just wipe off as much as you care to. Very controllable and pleasant to use.

Regarding use by guitar companies, I've read in magazine articles that Martin amongst others have been using waterbase on some of their top end guitars for a while now (definitely not all of them). However, I can find no clear information about that on their website. I suspect they are cagey about it because of the player bias towards nitro: I guess they imagine it would lose some sales if people knew what the surface was finished with.

I have an idea that in a few years time they will become a bit more open about it, announcing, "whadaya mean it has to be nitro? You've been playing waterbase finished guitars for years - didn't you realise?" Or something...

Cheers - C