Wood looks great inside the cabin. Yes, I would seal the wood, but entirely not just the back sides. Also, depending on the thickness of the strips themselves, you might be able to get away with more than 16" spacing for the furring strips. Also, I'd pre-stain and pre-drill each "slat" before installation. You'll be much, much happier that way and it creates less clean up. Make sure to use a counter-sink drill bit so that your mounting screws will sit flush. If you don't pre-drill, you'll run the risk of splitting the planks, which I'm sure you already know. Now, the bad news is, maintenance is going to increase, of course, but it will definitely look better.