Charlie, darned if I know for sure on the overhangs. I left somewhere around 1 to 1-1/2" and it seemed right.
Yeah, about any oil based stain should be OK. I used Parks Oil Modified Pro Finisher polyurethane varnish on my daughters stairs and we have been pretty happy with it. Thankfully, I was able to prefinish them before I installed the treads because the whole finishing process took about a week. Each coat takes a good 24 hours to dry and you obviously don't want to have your stairs out of commission that long if it's the main route to the second floor. You can do every other tread but you have to be careful about reminding the people in the house about which treads to use.
I have a coffee table with water based poly and it always looks a little milky because of that so I am not a big fan of water based. I was still going to use Parks water based on her stairs but I e-mailed Parks about theirs and they told me that the oil based was a lot better. When the manufacturer of both oil and water based poly for floors said to use the oil based, I listened and was glad that I did. The water based does dry a lot faster and you can put on three coats in a day but that's about all that recommends the water based. You have to have the area really clean when you apply the oil based since it dries slower and therefore is more succeptible to getting dust in the finish.
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