Slight change of plans: I decided to simulate the sea with spackling compound instead of paper. I tried using paper but it didn't work out properly - a mix of lack of experience and the feeling that it didn't look right in 1/700.
The spackling compound was applied with a paintbrush and worked around while still damp. We'll see how it'll look after painting..
The submarine was painted with Tamiya Black+White diluted with their thinner, X-20A. Once dried (20min), it received a brushcoat of Future (Pledge) acrylic floor wax that was left to dry for 30min or so, before applying the 4 decals. A second coat of Pledge was brushed over the decal to prepare everything for some aging techniques using oil paints.
So far it's looking right from my perspective. I was able to achieve the results I imagined, we'll see how it goes along...