As for rotting from the inside out...unless you're wrapping the timbers with cellophane, I don't think that it's an issue. Hell, my mother has a gnarly old tree trunk coated with about an inch of varnish (70's hippy wanna-be art) and it's not rotted yet, unfortunately....
That's my point, TG. I don't think a thin coat of varnish is going to seal a timber so well that it rots. Between the huge surface area of the timber and the checks, I just don't see it.
What are we hoping to accomplish with an oil finish? Are we protecting the timbers? From what? How long will it last until it dries up and needs to be reapplied? And then how much fun will it be to reapply to the inside of a finished house? CB.