The best "waterproof" finish I've found for a brush so far is epoxy (an epoxy designed to be used as a finish).
I first prep my wood to around 320 grit (this makes it finish ready, but if you go much smoother you won't get as strong of a physical bond between wood and finish), then I mix up my epoxy very carefully and pour it into a new cup after it's all been mixed (eliminates the unmixed residue problem).
Then I separate a part of the epoxy into another cup and cut it 50/50 with acetone. I rub the wood down with a quick pass from an acetone dabbed rag (all while wearing gloves to make sure I don't get the wood oily again) and give it a seal coat with this thinned mixture.
After the seal coat is dry (I wait 24+ depending on the mix instructions), I hit it quickly with some wet 320 paper... dry... wipe with light acetone, and apply a full strength coat by pouring, brushing, whatever until everything is coated well (very well!). Be sure to get over the collar area and however much you need to in the hole area to seal the wood that will contact water.
Then I hang it all to dry (usually from a wood screw turned a few threads worth in the knot hole). The epoxy will drip, and you may have to get some bubbles out, but when it's dried 100% (I go 2 days here) you'll be able to sand the spot where it dripped even with the rest of the finish and it will look great.
That said, there is lots that can go wrong.. but this is the best way I've found for wooden handles. I have done tung oil, varnish, poly (of all kinds), tung oil/shellac/poly etc. But as with everything here YMMV!
best of luck
Dave