Welcome back! Sorry to hear that you're still having these troubles. I DID talk to a contractor but I completely forgot to write you. It's my fault, I apologize because I said I'd get back to ya.
The contractor has never heard of this problem. He's been painting for over 15 years, self-employed. His suggestion is to stain the bottom row (or 2 or 3 if necessary) with a different stain. If you have to put a varnish over top, go ahead. The down side it the 'look' it may have but as long as the squirrls and such are chewing, you'll have a 'look' anyway. He doubts it's the cedar, and doubts it's even the stain. Did you put multiple coats on?
He further suggests you try 2 coats of something else other than the one you used. If this doesn't work, then get more toxic! BTW, has the legal route gotten you anywhere? My best to ya, and again, I'll be watching.