The structure must be designed for this sort of epoxy application, i.e., it must be fairly rigid. Kind of depends on what kind of boat it is, too. A sailboat will flex more than a power hull, and a large hull will generally flex more than a small hull. I would take a careful look at what West has to say on the subject in their manuals. If water gets into the wood, there is potential trouble.
Crappy wood contains moisture.
It's true that if it is totally sealed then there is no oxygen for the bacteria and fungi to live on, but it's still a risk. And if nothing is ever totally sealed, then everything you can do in advance to protect the wood is beneficial. This will protect the wood in case of moisture entering and form a perfect prime base for the epoxy coatings. Take a look at our test section and you will see the penetrating differences between CPES and the other products. And do read what West has to say.