Yup, the sapwood (of any species) is not rot resistant. I don't think the covering will matter too much, as it's still going to go from green to dry. Yup, that's right on the shrinkage. You should be able to calculate how much cross grain shrinkage there will be.

Maybe hot dipped galvanized spiral shank nails? I have a 50 lb box that I'll probably never use...