Personally, I think that if you let it air out long enough, it doesn't really matter if you use water or oil based. I used oil based sealant for my custom enclosure (that was a year ago). I let it air out for about two weeks -- until I could not smell the sealant anymore.

My snake is doing great, with no issues. The reason I used oil based is because I could not find any of the high quality water repellant sealants that were water based.