Hi
I went the first way, Preped wood then water based dye leave to dry for 24 hours light sand then tack cloth and grain fill ( I used a clear cellulose based filler ) wait 10 mins and scrape off excess (scrape across the grain and try and force as much into any larger grain pits as possable) try and get as much excess off at this stage as possable to save sanding later wait 1 to 2 hours then sand flat. check for any pits, refill the areas where the pits were then repeat till no pits are visable. Its one of those jobs where paitence pays off big. After the grain fill I spray some coats of sanding sealer and leave for 24 hours then sand flat. You are then on to the clear coats.
Hope this helps
Alan