Hi,
I've used pastels a great deal and the answer is certainly to put them onto a matt finish as they need something to key onto. If you apply them to a matt surface you shouldn't need to dampen them - you'll probably end up with quite a mess if you do! If you are going to apply them wet I would use something like white spirit not water. You will also find that certain colours/pigments "stick" better that others - at least, that's my experience. Darker earth colours & black work best. As for fixing them, again, the results vary depending on the colour/pigment. Personally I would make it the last job before sealing the whole model with a matt/satin varnish but be aware that some pigments just vanish when they are sealed!
Have you thought of using weathering pigments instead of pastels? I know that pastels are cheaper but there's a pretty big range of pigments available now which might work better.
I'm just getting back into aircraft after some years making 1/35 scale armour and I have used a lot of pigments - fixed with white spirit or even very dilute white glue if you want them to really stick! The answer is to experiment on something you're not too fussed about messing up! The results are often unpredictable but sometimes great & unexpected things happen!
Hope this helps!
Dave