When using real wood for terrain/model projects, urethane stain works really well: it colors the wood, ages it, and the urethane coating makes it really durable and resistant to chemicals. A matte clear coat is necessary, but the end results look superb.
When making scratch-built terrain, it is a real challenge to get the sizes to be workable. Mock-up's are a really great idea. Using Lego's for said mock-ups is a brilliant idea. Cheers!