The pros:
1. easy to apply- I brush or spray a seal coat of 2# cut dewaxed shellac as a sanding sealer, followed by 2 coats of waterlox. Waterlox may be wiped, brushed, or sprayed w/an airless. Use a brush on the drips if you spray.
2. Outperforms most interior finishes for water, UV, and scratch resistance
3. Easy to touch up if it is scratched. Varnishes like Waterlox will stick to a previous coat and feather out very well if you need to restore the finish years later.

The cons:
1. slow drying, and has a foul odor that lingers for weeks, but can be reduced by running a fan over the surfaces for several days after the initial dry time.
2. expensive, costs about $25 a quart
3. Once the container gets about half empty, the rest of the product starts to react with the air and will turn to gel. Only buy quarts unless you know you are going to use gallons on one job. Buy some spare quart cans to save the leftover from the gallon. Keep the containers with as little air as possible.

I understand your desire to do the finish yourself so you know it's quality and know how to repair it if it gets scratched. There are some newer water based finishes, really outstanding products. For what you are doing, I would recommend "Sierra" manufactured by rust-oleum. I get it from Kelly-Moore paint store. Sierra is a water based paint available in any color. For clear coating wood, just get the clear tint base with no pigment added. There is gloss and satin available. Cost is about $30 a gallon

Use the shellac 2# cut as a sanding sealer, then 2 coats of Sierra will give you a bullet-proof finish. It will stick to just about anything, many painters I know use it as a clear coat over painted cabinets. It will refinish just fine, can be brushed or sprayed. I recommend spraying. The finish is dry in an hour. It has no odor. I sprayed a bunch of bar stools in the other end of the room while people were open for business, no complaints. The stools were in use the next day.

So, can I just apply a thinned coat or 2 of Sealcoat to the treads (prefer to apply a couple thin coats, it's easier, dries faster, less likely to glob), then apply Waterlox over it? I've been using poly over Sealcoat on my pine doors, but I'd rather use Waterlox on the treads so I can touch them up more easily. I can't afford enough Waterlox to do the whole house (and most of the trim/doors are finished with poly or shellac/poly already).

Thanks, sorry for the hijack but still asking about Waterlox over shellac since it's supposed to be a penetrating oil finish. Or it it really more of a wiping varnish?

Waterlox will not adhere properly to lacquer, wax, or water-based undercoats. For your refinishing project, I think you are on the right track. Sand the existing finish to promote adhesion, brush on one good coating of the Zinsser seal coat shellac straight out of the can. let it dry a day before sanding it and giving it a coat of Waterlox. One final coat of Waterlox the following day is all you need. Perform a test on one area before you do the whole stairs. Let the stairs dry 2-3 days with fans running to speed cure time. Do not walk on the stairs until they are cured properly.

So no thinning of the Sealcoat?

I was going to do this while the kids were at camp next week (DH and I can sleep on sofabed), but if I can get a coat (or 2) of shellac on one morning and walk on it at night, sand it next morning and Waterlox it, I can do it just before we go on vacation in August and give the Waterlox an entire week to dry, no need for sofabed.

Thanks