Greg:
You've got the first step right - raise the grain with water and then sand lightly.
The dyes will dye the oak just fine, but you may want to mix it a little darker to start. Mix it dark, do a sample on a piece of scrap oak. If it is too dark, you can lighten the stain by adding a little water to the mix.
If you stain your project a little too dark, you can lighten it somewhat by wiping the surface with a wet rag. However, repeated applications of dye won't really darken further.
Remember, with dye stain, you are actually dyeing the wood just as you would dye cloth; the dye goes into the fibers of the wood, and you don't want dye just sitting on the surface.
When you apply the dye, you want to flood the surface of the wood, let it soak in good, then wipe off the excess.
The liquid dye stain you purchased is very good for tinting water-based lacquer. Roughly 300 drops per quart, iirc, varying with how dark you want the tint. Lightly tinted lacquer can give a real nice luminous color effect, and more tint in the lacquer can help mask dissimilar wood colors.
That's all I can think of for now, as I've only had half a cup this morning.
-- Timothy Juvenal