TUNG oil is a penetrating oil made to fill wood and stabilize it without turning it into plastic... When I get a new knife with a real-wood handle I tung oil it every day for a few days, then every week for a couple of months. You rub the oil in with finger or clean rag and then work it for a while to push it into the wood. Works great and after a few months of such work, the handle is beautiful and impervious to water for years (from what I can tell).
You can get Tung oil at most hardware stores... Main problem I've had with it is that a 1 pint bottle (smallest I've seen) is enough for hundreds of applications, and if you fail to really seal the bottle it will eventually turn hard like paint left in a can that isn't properly sealed...
Good stuff though...