Make the papier mache piece, burnish/press down the surface well, let dry completely. 

Sand surface if necessary.

Apply gesso. Most modern kinds are acrylic.  This helps to smooth out the surface & may require several coats.  Instead, you may use emulsion paint (acrylic or latex in U.S.) with whiting/chalk/calcium carbonate (all names for the same material) added to thicken it (don't overdo).  Decide if it needs sanding after every coat.  Application of any oil-based materials should be tested on a separate piece, as some oil-based materials will cause further finishes to not stick properly.

Apply emulsion paint, which can be used as a sub-finish coat or the final coat.  Don't sand the final coat if you are adding additional finishes unless you can sand the entire piece evenly, as rough areas may absorb the finish differently.

Decorate with practically any kind of paint you want:  acrylic, latex, stains, oil paints, watercolors, iridescent, metal flake, etc.

Sealers can be of any kind:  shellac (least toxic), varnish, polyurethanes.  Most come in different finishes:  glossy, semi-gloss, or matte.  Glossy finishes tend to magnify surface imperfections.  I use matte for mine, as I don't like glossy ones for most projects, but that is a personal opinion.

Sue

For iridescents I use jacquard lumiere paints and pearl-ex pigments.  In order to make the paint pop ... I use a dark undercoat, then brush a series of iridescent washes / or sponge / stipple some color variants. 

I find that by burnishing or smoothing out the paper mache when I'm putting it on, I can avoid most sanding ... but I'm a fan of the smooth stone-like texture that I get.  It's not cottage cheese, but it's also not mirror smooth. 

If you go for mirror smooth, any imperfection is obvious.  If you embrace the stone-like texture, then imperfections are much less noticeable.   : )  In full disclosure, I'm an impatient artist who hates sanding ... so it definitely colors my perspective. 

-- b