Jed,
What is happing is when you put the first coat of the Kilz on it is lifting the grain of the wood and holding it open. If you have your Kilz like water it is soaking in the wood deeper and not sealing the pores of the wood. So you have a minute opening where air can get trap. Now when your etex is heated up it is more of a runny liquid. Now the etex is getting sucked in the wood pore and sealing the hole and causing the trapped air too escape creating the bubbles. Two things you can do (one) use thicker kilz, (two) sand after each coat of kilz.
When I do my dipping I will let the first coat dry, I speed up with a heat lamp. This might help maybe it is drying the kilz before it soaks in the wood deeper. When I have dipped all my baits I start back at the first one. I hit it with 200 grit sandpaper smooth all the wood grain down. Wipe with a damp cloth and dry. I do this with the rest of the baits. Then I flip it over and dip the other end. I let this one dry over night. The next day I sand it and it so smooth and no raised wood grain.
Jed, I have started using the same wood you are using for a top water lure. I have not run into the problem that you are having. But I will say this, I have seen the lure suck in more of the kilz and lift the grain more then my maple lures.
Jed, I know we can get this to work for you PM me. I tried to call you on Tuesday night tell me when the best time I can call so we can see what we are doing different.
-Corey