Along the lines of making a waterslide decal, I found some old transfer paper that I used for the kid's t-shirts years ago. I thought this was worth a go as the waterslide was proving to be "inconsistent" in a couple of ways.

From memory, this comes with a clear backing or a white backing and what I had was with clear backing.

Once printed (backwards, fo course) I then placed it on the headstock (bare wood, no finish yet) put a tea-towell over it and then Ironed it in.

Once it's peeled off - whie still warm, it's possible to peel off most of the backing - you won't get it all but you can get a lot of it.

once cooled - I put a layer of hard oil wax over it, when that had set I sanded back lightly.

After about 3 such layers of the hard wax oil (with each layer I was a bit more comfortable with sanding a bit harder), the edges were pretty much gone.

It's worth noting that I did not adhere to the instructions.
I put the wax-oil on with a rag - and wasn't shy about making the layer even rather than thin.

I can't remember exactly - but after 4 coats the edges or otherwise was simply not visible.

The only caveat that I found was to make sure the transfer paper 'moves" - which it did (not in the practice piece, of course).
I would guess that using a smaller cloth might make it easier to keep everything from moving.

Heres a picture of the finished headstock:
Click image for larger version. 

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It worked pretty well - apart from the ever so slight smudge.