No reason for a lid or airlock (although these options would work). I use a clean dish towel rubber-banded onto the top of the bucket. Fermentation will be pretty vigourous in primary, so don't worry about oxygen infiltration; you only need to worry about dust/bugs falling in.
What little oxygen does penetrate the must will get eaten up by the yeast (promptly.)
It's actually decent enough to put together more than a gallon. The way I see it is--if you can get those 96 oz (3-quart) jugs of juice for about $3 (which is normal price around here,) your total investment for 5 gallons is $20 plus a couple bucks for raisins/yeast. It'll yield 25-30 bottles at about $0.75 apiece. Worth the minimal investment as this sucker is a crowd pleaser.
Good choice on the oak, especially if you're a Cab-Sauv fan. This turned out to be a people pleaser (read: semisweet) so it's not really my style. I've got some Jack Daniel's soaked oak chips that would be a good addition as I'm a fan of both oaked reds and brandy.
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