Ideally one would use cedar for siding, but if necessary many woods will work if they are properly maintained. Good quality oils will preserve unpainted siding. a good coat of paint will be very nice in this case, because you flatten the color and end up with nice shadow lines on the wall. You could also thin oil base white paint or primer with oil to wash and whiten the wood while preserving it. There are oils that are made to weather to a nice gray as well.
In this case, a wall sheathing should go on the studs. When doing a plank wall, such as board and batten, there is little aid from the siding to keep the house from wobbling in the wind. The broad sheets of sheathing act like a corner brace.
Once the sheets of sheathing are on, use milled boards of a decent width(approximately twice the size of the second layer boards) so that you have a nice rhythm to the siding rather than wide and narrow or some irregular pattern. So, if the final boards will be approximately 8 inches wide, you would want the milled first layer to be about 16 inches or perhaps a little wider.
Nail the first layer boards up along the edges of the boards, into the sheathing, but make sure you also hit the top and sill plates with the nails. Oil or stain the first layer if that is your ultimate finish.
Now rent or buy a portable sawmill, Rip logs into 1 inch planks with raw, live or irregular edges on both sides.
Nail these planks up over the first layer, leaving large gaps between them so that the first layer is about half exposed. Nail up the boards so that the slope of the live edges is wider against the inner boards.
Finish the outer layer boards to complete the job. Remember that boards expand and contract with the weather. You may wish to nail along only one side of the first layer if the boards are wide. This is fine if they are well secured. You may wish to screw them on. The second layer boards would be especially good nailed in the middle so that the fasteners hit the gap between the boards of the first layer. This would allow the boards of both layers to expand and contract at will.
Very wide first layer boards may benefit from a half inch or more gap between them, or even more. You could even SHIP LAP the edges of the boards, so that no gap appears between them. Obviously they will not show, but air gaps will be lessened. When doing this, you must make sure that the second layer is nailed into the NON MOVING edge of the first layer boards as there will be no gap between boards to nail into.