All sounds good except I would use a finer grit for final sand on inserts.
Painting white areas white first is a good idea as well as wood areas depending on decal type and quality.
You can clear wood first but will probably take a couple coats with sanding. You will want it to cure/out gas for awhile before applying decal.
Wet method is fine but need to make sure wood is sealed good first but I do think dry is best but being your first overlay I would maybe do wet.
Do a test on decal material before you clear or if not as mentioned above do light/mist coat first and see how it reacts.