I have used Pressure treated since the first failure of man made trim. Wood has proven itself over & over. Customers may know it is the fault of the trim, but still look at you, because it failed, leaving a customer questioning your knowledge of materials used.
You can use # 1, but it is rare I use # 1 here in SC, because we have nice hot weather, with lots of sun.
The surface moisture on any of the lumber dries fairly fast & the bit on it does not or never has seemed to bother the process.
With the # 2, (depending on how wet the lumber is when delivered, I mean by standing water on the lumber) if none, soon as it is unloaded, we find a place off the lawn & spray or sponge mop with Olympic Clear seal, install, siding & trim, after at least 72 hrs, then it can painted with 100% acrylic latex paint. I use S/W problock. Then finish with 2 coats S/W latex exterior super paint grade at the least.
Works great every time.
The Olympic clear seal slows the drying process, minimizes shrinkage & movement as wood dries. Must always wait 72 hrs before painting, manufacturers recommendation.
The latex allows any moisture inside the wood to escape without harming the finish,
Also consider one of their elastomeric Sealants, we use NP1 from roofing supply, but I believe it is S/W's Pro select is the caulk they developed with the same properties as NP1 for exterior use. Caulk exposed nail heads as well to prevent moisture seeping in.
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