Hi Jeff:

Why don't you do an experment. Take a scrape figure or piece of plastic and paint exactly like you did your parts and figures. Let the paint dry, a few days of course, and put it in water and see what happens.
I, for one, would like to see if "Dull-coat" lacquer can stand-up to water. I've used "Dull-coat" on aircraft models, with great results, but I do not know if it is completely water-proof for R/C submarine usage. If you do the experiment, please repost here, so the rest of us will know. Thanks.

Good Luck and Good Hunting,
Jerry Pope