I think yoou are saying that you'd like to keep the "brightwork" bright - not painted.  You might get a few differeing opinions, but here's mine.

Painting the whole thing will be easiest. Just need to sand to a good smooth/clean surface and paint.  I'd probably paint, then go boating.

If not painting you have a few options - and one thing that isn't an option (putting epoxy over any varnish).

1) Varnish Only: Just as soon as you've got all the loose material scraped and sanded away, and a surface that is sanded smooth enough for you to be satisfied with varnishing, you can varnish. It won't be beautiful, but is basically the same prep that you'd do for painting. Won't last quite as long as paint.

2) Better Protected but not Beautiful: To get the longest lived surface, you need well-adhered epoxy sealing all wood surfaces, and this obiously isn't the case based on the evident water stains.  To prep for epoxy, you MUST be sure to sand off all varnish (but not all epoxy unless you go with option 3).  You might be able to tell the varnish is gone by the fact that a bit of "pine tree" smell will go away when you have removed the varnish (and have removed all the varnisn dust).  Also by a change in feel of the sander (less drag) or the appearance of the powder dust created (epoxy more white-grey than varnish, which is more yellow - but this isn't really distinct). At that point, and before coating with epoxy you might want to try Oxalic acid to lighten the water stained areas.  You have to let things dry well before then coating with epoxy, and things will probably still be a bit spotty.  Anyway, you'd coat all the bare wood spots and the remaining sanded epoxy surfaces with epoxy, and then varnish.  

3) To get a really nice look you'll have to sand everything to bare wood, avoiding the problems you get with scalloping the surface/keeping the surface flat as you sand away the last patches of epoxy adjacent to softer wood areas.  Then maybe the Oxalic acid treatment if the stains are too deep to sand away, then start from scratch on the bare wood with epoxy and then varnish. This won't really be more durable than process # 2, just might be better looking when done.  And a lot more work.

   Thanks Bubblehead. I leaning toward paint frames with the interior and then varnish the floorboards and bow and stern seating. 

Another issue has appeared: two of the frames are separating from the sides but only near the gunwale What is a good way to re-attach them? Here is a picture of them at rest and then with a little flexing outward.

   I've removed the fillet and am waiting for the epoxy and 303 filler to redo these. 

Though maybe I'd find you asking about 'what to do' here' Classtime....

Other than what I'd posted on the WB Forum, you may want to consider pulling that errant panel into closer contact with the sheerstrake.

(Others here, more familiar with the CY design, feel free to add your opinions.)

Generally speaking, when working with stitch & glue kits, common advice is that '1/8" is close enough' so take that as a kind of Rule of Thumb for the evident gap.

Typical stitching wire used is 18 ga. (0.0403") bare copper, available in many hardware stores as well as here at CLC's store. Original stitch holes will have been filled with epoxy & maybe varnish/paint so a smallish drill bit (any between #60 to #58 will work, can be found in welding tip cleaner kits w/ suitable holder for not much $$ at that same well-stocked hardware store or welding supply outfit) will prove useful for poking new holes in plank and bulkhead should you desire to bring the parts closer together before adding new fillets.