Apply the stain liberal and back brush in really good this siding will soak it up.I would use a Timberflex or Sikkens instead of just poly,if you use poly adding color later is loads of work you just can't restain over poly so whoever told you this was wrong.
Go look at the Log Homes I do http://pictureperfectpainting.20m.com/
This way you know it is coming from someone who knows about custom staining.

What exactly is Timberflex or Sikkens? I'm not sure if this is another coat of finish that you put over your stain or whether it is somthing you add to the stain. Where might be a place to get the stuff. Sorry for the ignorance. I just want to get it right.

it is a 3 coat process,it has 1 coat color,then you put two coats of clear on.Now just because it is clear does not mean that it is the same as poly.
Sikkens and Timberflex can both be purchased at most paint stores such as H irshfields,S herwin Williams.
I seperate the names of stores so Villas web site doesnt do X them out.
Or can be found at wood specialty stores Sikkens is a little spendy but lasts and looks great,timberflex also looks very nice and less expensive but it is relatively new ive used it alot but in the last 3 years only.Ive seen Sikkens product on siding 8 years old and still looks nice.
When you have to redo it all you do is just 1 coat and it apply's so easily.And no im not a rep for them just a painter/business owner.

Thanks a-lot! Really appreciate the input and advise.

I would not use urethane outside as it will not hold up well at all.

You could use 2 coats of an acrylic solid hide stain it will last 6 to 7 years and cost alot less than Sikkens which is way over priced in my opinion. I am familiar with Duron Maxwood Acrylic stain but if you can't get that brand in your area go to your local paint store and get their top line product.

Our home is clad in T1-11 siding. What is the recommended number of years before re-painting is required? Also, is the T1-11 considered the exterior building surface or is the coat of paint applied considered the exterior building surface?

What an odd almost philisophical question. The siding would be the outer building surface. Stain penetrates and seals the surface and paint is a coating on the surface. But it is really sematics...how do you define surface? Etc. two coats of exterior paint is an amazingly protective layer.

We are looking into a stain option for our T1-11 siding cabin, is there a non-toxic or low toxic product you would recommend??

In Florida, we stained a outbuilding with Solid color stain from Lowes. Four days later the color comes off on your hand when the T1-11 is touched. Whats up?