I have had good success with wooden masts, by coating them with one layer of woven rovings ('boat cloth') and epoxy, then filling in the weave with epoxy slightly thickened with colloidal silica. Sand the mast and then apply as many coats of two-part polyurethane paint as is necessary to build to a solid colour - usually four.
I've have also finished three masts clear, coated with cloth and epoxy (without the silica - you need an extra coat) and using International Crystal to varnish them. An absolute minimum of six coats should be applied.
International Perfection paint spreads beautifully; indeed most polyurethanes can be satisfactorily hand painted onto a mast. I often finish with clear two-part polyurethane that is guaranteed to have UV inhibitors - the gloss seems to last longer than paint, although this might simply be my impression.
Varnished spars look lovely and yes, the varnish will discolour if water gets underneath. However, if you've done your job properly, water won't get underneath. Chafe will attack the best of paints, and, as you've discovered, glass and epoxy, too. If I were you, I'd be concentrating on eliminating the chafe. If there's no chafe and plenty of coatings, you should get away with repainting/revarnishing the mast only every 5 years or so, although I'd always repair any damage, myself, as soon as it becomes apparent.
I'm using Carboline products (can't afford Perfection and the range of colours is too limited): I used this for the aqua paint on Fantail and it still appears to be holding up on the topmast, although I haven't seen the boat for six months. I made the mast 8 years ago.