I use Minwax water-based Polyurethane, satin or semi-gloss finish, depending on what's on sale! I color it with analine dyes, available from Lee Valley in powder form. Make a highly concentrated color agent using a small amount of boiling hot water. You want to keep it highly concentrated so that adding it to the poly does not dilute the poly any more than necessary. Start with about a pint of poly and mix in the colorant to suit, testing frequently on scraps.
Most of my stuff is made from Pine two-by-what-have you or Poplar, so the water based poly raises the grain pretty well, requiring sanding and a second coat. My second coat is with a basically "dry brush" technique, putting on just enough to barely cover the piece. The effect is quite striking on clean bright Pine and Poplar! Once dry, the Rug Rats can chew on it all day and not get red teeth!
