Not sure about the best way. Obviously leveling, crowning and polishing will take the lacquer off the frets. Or is it better to peel the lacquer off afterwards?
Rickenbacker laquers right over them, then grinds it off while flattening the fret tops. Thats why Ric frets aren't really crowned, they can't be without digging into the "ramps" of laquer coming up off the fingerboard. I always wondered how Fender handled laquered maple fingerboards, you dont see laquer goobered onto the frets, so I thought maybe they cut the frets after laquer. Anybody know?
Among us "boutique" (I hate that term..) builders, it's usually both. Lay down a basic coat or two of finish on the bare wood fingerboard after slotting and dotting it. That's mostly to protect it from grime during the fretting. Put in the frets, level, crown and polish them. Clean them off with alcohol, then spray on the clear or whatever finish, right over the frets. Buffing out the finish on the fingerboard will clean the finish off of the tops of the frets. That's the normal process for maple or other light colored or soft fingerboard woods. That's pretty much how most of the big manufacturers do it too, although they may skip some of the steps. Like leveling, crowning and polishing the frets....