Your example is an exception to the rule, though. Usually, two adjectives don't modify each other. In fact, I find your second example a bit ambiguous because

Your example is an exception to the rule, though. Usually, two adjectives don't modify each other. In fact, I find your second example a bit ambiguous because of that very fact -- it could mean that the varnish is blistered or that the wood is blistered. The first seems to make more sense in terms of semantics, and the second seems to make more sense in terms of grammar.