Have you seen the photos at the thread linked below?  I'm doing the same.  I don't want to look at those nail heads.  But I don't have any answers.  I reckoned I'd do the paint first then varnish over everything, but also planned to poke around for info before I did it.

http://www.clcboats.com/forum/clcforum/thread/5523.html

I do wish these forums had a better search function. Or I wish I were a more skilled searcher.  All my searches bring up little more than recent and not particularly relevant threads.

I've finished a Ches. 14 and and LT-17 pretty much as you plan to.  I'm definitely not suggesting this is the one and only true way, but this is what I did ....

The basic plan is that the cockpit combing and the deck immediately surrounding the cockpit is painted.  The rest of the deck, including the hatches, is varnished.  In addition, the hull is painted, and I carried the paint up over the sheer and 3/4" on to the deck, so as to cover the screw heads (I used screws in lieu of nails).  

I used blue painters masking tape -- the narrowest I could find, so I could form broad horizontal curves.  I then backed up that tape with more tape, until I had masked off enough that I wasn't worried about accidental spills.

First, I taped off the edge that was not to be varnished and did all the varnising -- 6 coats, for what it's worth.  Then I pulled that tape off (working carefully, it came off pretty easily), and taped off the varinished deck, leaving just a sliver of varnish showing so I know the tape was in the right place, and primed and painted the unvarnished deck and hull with my base color.  Then I pulled that tape off, and taped off the portion of the base color I wanted to keep, and painted on the second color.

It's easier than it sounds.  If you use a narrow tape, you'll find that you can curve it pretty easily and smoothly just by eye.  Carrying the paint up 3/4" on to the deck to hide the fastners also attractively frame the varnished deck.  Then I ran curving lines of tape across the deck just forward and aft of the cockpit; one of the curves followed a varying radius curve that approximated 30".  It all worked pretty smoothly.

One additional thought.  I wanted the juction of the painted edges to meet with a curve instead of an acute angle, so I joined the two strips of tape running up the sides of the deck with a pieces of tape from which I had cut a curved mask, using a quarter as the pattern.  To my eye, it looks better than having the two lines come together at an acute angle. 

Two cautions: Be sure to rub the tape down firmly to ensure a good, tight seal.  And store your tape in a plastic baggie so the edges don't pick up dust, hairs, or other garbage that would interfere with creating a clean, sharp line.

I'd attach a photo if I could figure out how to glue a JPG file to this message; none of my pics are on the web, so they don't have URLs.    :-(