It dries hard but maintains ability to flex with the boat...you wouldn't want to use filler or anything of that sort as it would not flex. With screw size holes you may not have issues either way but it isn't worth the risk. Also the 5200 is impervious to water for the below water line holes.
I don't think it really needs to be tooled in, but it may be easier to look finished that way I suppose. I just used my finger on mine...if you want to make it a little more pliable after you have applied it just dip your finger in a little acetone or something like that and run your finger over it and you can smooth it out real nice.