When your stain is blotchy, for whatever reason, in most cases you can blend it in by hand sanding with 600 grit sandpaper before you apply the next coat. I use Abranet brand 600 grit. Does not clog easily and works great.
I remember a while back about how I was puzzled on how period furniture had parts of the inlay that were NOT stained dark, while the rest of the inlay and the furniture itself appeared to have a dark stain. How was that done?
After some investigation on the internet and asking around, the answer was very simple. You don’t use a dark stain at all, but you use darker woods like walnut or mahogany and put a clear finish on it. Duh!
During the process of figuring that out, maybe a few months, I actually did a couple of pieces where I had to figure out the best way to protect the white parts of an inlay (holly, maple, whatever) after they were installed. After all, staining the piece before installing the inlay had a whole different set of problems, and I didn’t want to even go there.
To make a long story short, it can be done, and quite successfully so. The steps are to apply a couple of wash coats of 1.5# dewaxed shellac on the inlay before installation. The cans of Zinnser SealCoat are 2# cut, so just add some denatured alcohol to get it to 1.5#. You could use it full strength though, but that’s what I had laying around at the time.
Install the inlay, and tape it off with Frog tape cut in thin strips. I also tried automotive detail tape that you can buy at most any auto parts store. Whatever you use get a good seal using the edge of your fingernail.
Now apply the stain, let it dry, and carefully peel off the tape. It usually turns out very well. That is what I did on the sacristy table pictured on this site. Not bad at all.
The downside is the shellac does add color to the wood, so if you want the holly inlay to be really white, scrap this idea, and do it correctly, i.e. use a dark wood and forget the dark stain.
UPDATE: I attended a finishing class by Peter Gedry’s (petergedrys.com) and he showed us a trick (much more of a skill), where he used a small brush and painted on the stain FREEHAND around the inlay. Not for the timid, but it works!