You are correct, where all the paint was falling off was because they painted right over the varnish. (........ Seeing that happen all my life on boats is why I shake my head when I read recommendations about using "spar varnish" as a sealer under paint.)
The name will go on in gold leaf, though that won't be for a year or so to let the transom planking swell back up and settle down. I don't see the point in paying for real gold leaf only to have a seam in the planking shift and mess it all up.
Yes, I am pretty much setting her up "period correct", but not going overboard about it. One of the big reasons for this is it keeps things much simpler and less complicated (and less expensive).