Water Shed helps, but it is pricey. Any durable water repellent (DWR) waterproofing spray or liquid sold to water proof fabrics or renew the DWR on waders works just as well and is cheaper.
That being said, I don't bother to treat dry flies but I DO water proof batches of brightly colored egg yarn in advance to use as yarn strike indicators. It makes a huge difference, at least in my experience.
Bottom line, ever since I discovered Frog Fanny (hydrophobic fumed silica,), I don't treat my dry flies with anything in advance or to be honest with anything else period despite still carrying around a bottle of liquid Mucilin.
As far as the revival of a drowned fly, I have been using a combination of an Amadou patch followed by shaking the fly in a container of Cortland "Dry-Ur-Fly" (super fine desiccant silica gel crystals) for eons. When my fly comes out of the Dry-Ur-Fly it is bone dry and ready for another application of Frog Fanny which by the way, ISN'T a desiccant. That's why I dry before I reapply.
FWIW - Treating a soaked fly with just Frog Fanny or even the blends of desiccant crystals and hydrophobic fumed silica while simpler, will allow the super fine "Frog Fanny" powder to get embedded in the soaked fly. You may not realize it initially, but that embedded wet Frog Fanny will shorten subsequent floats you get out of that fly verses drying it in a separate step.