I have heard of this, and I don't think it's clay as we normally think of it. It's called clay-ing the bow, but the "clay" is really hide glue mixed with something else. The gentleman that explained it to me told me that he mixes hide glue with fine sawdust, usually of the same type of wood the bow is made of. Then you spread it on thinly in such a way that it really just fills in the texture that comes from sinew-backing and makes the back of the bow smooth, so it won't be a continuous layer of clay all over the back of the bow. If spread on in this way, you're not using very much at all, and don't really even have to worry about cracking too much, and since it's really just a thin layer of hide glue that fills in the cracks, it should really adhere well to that backing you've already laid down. I think this will work best when the backing has fully cured and you've already smoothed it down with a scraper or something.
Doesn't sound much like it is designed to protect the sinew from moisture, but it made a smooth back that can be painted, and maybe that is what protects the bow from moisture?...
Now, all this I've said is just from talking with a friend who has done it, not from personal experience. I hope to give it a try myself some day.