The technique you're thinking of is called wetblending, and it can be used to great effect. The trick is to blend the shades together on the model itself by keeping the paint wet. It can be tricky to prevent it running all over the place so it takes a bit of time.
Blending should be done dark colors over light. Trying to get light colors over dark is doomed and leads to swearing, throwing things and general destruction.
I use Future to keep the paint flowing and extend drying. Here in the UK it's called Johnson's Klear, as you probably know. A few drops of a premixed 1:5 Klear to water once I've thinned the paint already seems to work for me. You want the paint really, really thin. Several washes are better than a few.
There are some cheapie airbrushes on eBay that are basically Iwata copies. I just got one and although I haven't tried it yet, it could be a cheap way of starting out with airbrushing. I just didn't want to pay hundreds of pounds and then find out I'd rather play Elder Scrolls. If I like it and get on with it I'll consider getting a proper one.