Water based will always stain deeper into the grain. I have not done with walnut, but have with oak leaves, can't imagine its much different, the process.
Haven't done alcohol since I was a kid, essentially, you would be making a tincture.
I have made a die from walnut husks with success. The trick is to make it as dark as possible then lighten it up as you use it with water. Don't use alcohol - it blotches much to easily.