No, the clay itself is not waterproof, which is why there are two waterproofing steps. Once before the paint and once after. Though, I would not suggest letting them soak in water, giving them a wash won't hurt since they are waterproofed. They're inexpensive enough that even if the person does NOT waterproof enough to make them completely sealed, it's not a big loss cost wise.
I have a resin kit that I was going to use, but I read some other DIY's where people were looking for an inexpensive solution. So the point of this DIY was to keep costs at a minimum and make it easy enough for even kids to make.
I think that by the time you bought Fimo, latex or even plaster, with all the other sealing and painting...it would be more cost effective to simply buy a store bought hide.
Again, if you have the money and want the satisfaction of building it yourself, by all means, go for it...I am sure your ideas would make some killer hides! Thanks for the ideas!