Did you clearcoat the balsa and then foil and paint directly to the foil? Were there scale indentations in the foil if you did paint directly to the foil? If this is the case, I think I would just start over. Or spray the bait in a solid color pattern and topcoat again.
If you topcoated over the foil before you painted, you may be able to sand the area out and repaint. However, I doubt that you will get it back to perfect. My experience is that when you clearcoat the bait again after sanding and repainting that there is a difference in depth.. the clearcoat brings the depth out.
Look are you building lures to catch fish, or are you building lures as a hobby artist? If a bait is used it will get its dings and teeth marks, they dont have to be pefect to catch fish. In fact I doubt fish see half the details that get put into baits even in gin clear water. The bait is moving to fast for the details to be seen. The details are for selling the bait to the fisherman.
I always clearcoat over the foil before painting. That way if I make a mistake with waterbase paints, You just wipe away and repaint.
Heatsetting appears to be a issue with several of the topcoats.... it must be done. Etex,Devcon, Dick Nites....all 3 require this.
Post a pic and let us look at it..... worse case if the foil is ruined, Spray whitepearl over the whole body and work on a new paints scheme and topcoat it.
Mike