Ronnie -
First questions first. Tru-Oil can be thinned very nicely with mineral spirits (painters' thinner, varsol, etc.). I normally don't thin Tru-Oil except to seal the stock for the first coat, and also to use as a protective coating for color case hardening. This makes a water thin application which can be brushed on like a coat of paint, leaving no runs, drips or sags.
When used as a stock finish, however, the paintbrush or rag application is all wrong. Following the first sealer coat, all subsequent coats should be rubbed on with the fingers, and applied as thinly as possible. What I usually do is dot the stock with a finger dipped in Tru-Oil, making maybe a half dozen dots on either side of a buttstock, for instance. Apply no more finish than this. Then, with your fingers, thumbs, palm of the hand, whatever, start rubbing the Tru-Oil dots, attempting to spread this minute amount of oil evenly over the whole stock. The oil will be slippery and easy to spread at first. Keep rubbing, and the oil will begin to polymerize and feel more sticky and resistant to rubbing. Keep rubbing until it is almost impossible to slide your hand over the now-partially hardened finish. May take 10 - 15 minutes of rubbing. I've never timed it. Just rub until it feels like your skin wants to squeak when pulled across the now tacky surface.
You will now have a very, very thin coat of partially polymerized finish, evenly distributed over the surface. Set it aside to finish hardening. Time to cure will vary with your ambient temperature and humidity. In south Louisiana, where it is very often hot and humid, I can usually put another coat on after 4 hours or so.
You should not have any trouble with a wavy finish, or dust or lint in the finish, using this method. I have been using this method of finishing for probably 30 years, and it works every time. Most of the problems people have with Tru-Oil come from applying it like a varnish or paint. Try applying the smallest amount possible and rubbing it in. I think you'll like the results. It's darn near foolproof.
Also, you should not have to use steel wool as much. The rubbed finish is self-leveling. About the only time I resort to steel wool is when I pick up a piece of dust or trash off the bench and it makes a bump which won't rub out.
Bill