I don't know if it's gospel, and some folks use a lot of the stuff and love it, but I stopped using linseed oil a long time ago. My reasons were unpredictable drying times (some of them very long before you could do any other work or use the item), the eventual black yuck that often happened to oiled items, and finally a research paper I once read from the Forest Products Lab that claimed that linseed oil made really good food for the little micro-critters (spores or whatever they are) that cause wood to rot. If I want an oiled finish I use either Decks Olje #1 or Watco Oil, which dry predictably and don't turn black. There are certainly a lot of finishing products out there that contain a certain amount of linseed oil and work just fine, but in my opinion just slathering a piece of wood with either raw or boiled (it's not really boiled, but has drying agents added) linseed oil may not be making anything better.
Oiling before varnishing has rather questionable merits. If it's being done to try to bring life back into an old, dried-out piece of wood, it's pretty much fantasy. The color may certainly look a bit better, but most folks have a very unrealistic idea of how far oil (or varnish, or epoxy, or even water) actually soaks in when applied to the surface of a piece of wood. The vast majority of a freshly oiled piece of wood is unchanged, and any benefits will likely be just at the surface. You can oil, varnish, seal or coat a hunk of cedar with as many coats as you want of anything you want, but in five seconds with a sander I can be down to raw, untreated wood.
If oiling is being done to seal better or make the varnish stick better, it really doesn't need it and it may not be helping. Areas that your varnish was intended to stick to may already be filled with oil - and if it's linseed, that oil may be soft and sticky for a month or more. I'd rather start with clean, dry wood and thin the first coat of varnish. Old Town used to say they thinned the first coat 50/50 and then went to straight varnish for the remaining coats. I can't really see a reason to reinvent the wheel and do something different.
I usually attempt to get the job done with just as few products and chemicals as possible. This probably comes from all my work with epoxy, where chemical contamination can make for a really nasty, expensive mess that's seriously hard to clean up. For just varnish, if I can get a nice finish with nothing more than the varnish and a little bit of thinner, that's what I'll do.
