Hi Brad,
Captain's is a nice varnish; you've done well to choose a traditional spar varnish as opposed to a urethane varnish. Thin first coat 1:1 with a good quality thinner (you might want to use the manufacturer's proprietary thinner just to be sure there are no incompatibilities...greater cost than mineral spirits or turpentine, but it's not much additional over everything else you spend on restoration). Some people advocate going through a whole range of stepped concentrations up to 100% varnish, but this seems overkill to me. You can certainly get a great finish, excellent adhesion, and fast build by going 1:1, then 3:1 (75% varnish), and then subsequent coats at 100%. Others may disagree, but many boats finished this way give fine service with no apparent ill effects.
Number of coats? Some builders have put as few as 2-3 coats on new wood, but this is pretty thin. Old wood also may require more, though your application of oil should reduce absorption of thinned varnish into the wood. For a user canoe, you might put on 3-5 coats on top of the oil; many deep rich show finishes on old boats have many more coats.
You may use either a good quality natural brush (badger, China bristle, etc), or a foam brush. Foam will generally give you a thinner application, but they work well and don't require careful cleaning. A high quality natural bristle brush just feels good and gives beautiful application, but only practice will give you a consistently level application. In either case, flow on the varnish without excessive brushing out. Make sure you get an even coat- watch for sags and runs with a bright light at a low angle to the surface and correct them before the varnish begins to set up.
If you want an excellent book on finishing, including thorough explanation of a variety of issues and techniques plus beautiful inspirational photos, look for Brightwork by Rebecca Whitman.
May your future be glossy and resilient,
Michael
