Did it just discolor the Varathane or actually get all the way through to the wood? I suspect that it has just discolored the finish so in your test, you can try just scraping the Varathane off to see if that is the case.

 

Lazyman - nope - it soaked through the varathane and discolored the wood. I think if I had used a stain like "American Walnut", instead of just "Natural", the discoloration would be hardly visible. I built up a sample board - some "Natural", some "American Walnut", 2 types of water based urethane, and 1 type of oil based urethane. It's in the final drying stage - I'm going to test it tomorrow morning - in the meantime, I'm stripping/sanding to see if I can sand the blotch out. If not, I'm going to see if a stain will 'hide' it - failing that, I'll be rebuilding the doors and drawer fronts. Very frustrating - this is the first time I've worked with walnut - most of my previous projects have been oak and I've never had a problem with water based urethane before.

 

I've never been impressed with the water-based poly. I've not had any problems with oily fingers making stains on the top of the 3 computer desks (walnut tops), and the laundry counter top (maple) that are finished with with Seal-A-Coat, followed by a couple coats of Arm-R-Seal and some wax.

You might try some wiping acetone or alcohol on the sanded wood to remove any oil residue that might still be soaked in the wood fibers.