For those interested, I had been debating what I might do to avoid moisture and warping of the wood. Current idea, glue ridged foam board (1") around the inside of the collar. I used 2x10 lumber for the collar to gain head-height so a corny will fit there on the shelf over the compressor. Added benefit is weight; the collar and lid stay put just floating on the top of the chest. The external will be wrapped in 1/8" plywood and extend about 1" below the top of the chest. Combined with the weight, it should stay in place without any issues.
You probably cannot see it in the picture, but the inside (white) lip is about 1/4" of an inch lower than where the wood meets the lip of the chest. Therefore, the foam board will extend that 1/4" of an inch and should create a really good seal. Of course, I could always apply some aluminum duct tape to that joint for extra protection against air infiltration.
More pics coming as I make progress!