I have done a variety of top coat combinations trying to get what I think is "right." I don't know what is right. But, I do know that if I only dye and coat with resolene, the sheath can feel "dry" and stiff. I fit my sheaths snugly, and a little flexibility or suppleness feels natural and provides some spring back that gives a positive retention that isn't too hard to jam in and out.
I use Fiebing's Golden mink oil to soften it up and get the leather looking good. It will serve as a finish that is more easily maintained. If I want max waterproofing, I go a bit lighter on the mink oil and top coat with the 50/50 resolene. Cutting it with water reduces the sheen.