The wood used in Japanese shells is indeed mahogany. However, it is an asian mahogany, not the denser African varieties of higher end shells. The term "lauan" is a product, a type of plywood and is made from many different types of woods. This lauan from the MIJ drums is made from asian mahogany woods of low density. There are over 125 varieties of mahogany worldwide. As it ages unprotected, the grains split and open, the very thin plies begin to seperate.
I use lacquer on the interiors of my MIJ shells to close up the grain. This strengthens the really thin 3 ply shells and makes the shells more reflective. The thicker 6 and 9 ply shells are the same woods, just thinker, heavier and tend to have higher reflectivity due to this fact.
Other people that deal with MIJ shells use other products, it all has the same end result, making the wood last longer and adding sound reflectivity to the interior of the shell. Some of the more popular products, besides lacquer and polyurethane, is Tung Oil. I prefer lacquer over poly because it give the wood a more warm sound than just a coating of plastic, which is what your basic poly is, liquid plastic.
My drums sound very nice, musical, and have a wonderfully deep resonance. I have several kits of mahogany lauan from Japan and they do not sound "trashy". I do more, however, than just "paint the insides". These are indeed complex drums, and the more you understand about the nature of resonance and sound wave movement within a cylinder, how to work wood, edges and otherwise, the more successful you will be in restoring and renovating the drums at hand.