I use milk in a spray bottle. A couple spritzes on the back of the label to cover it with droplets. I place it on the bottle and use a paper towel to squeeqee any excess milk out from underneath the label. I have used 2%, 1%, skim, and whole milk and I haven't noticed any difference. I have used 20 lb, 22lb and 24lb paper. The lighter paper might be a bit more forgiving of under-spritzing but they all worked pretty much the same. If I put too much milk on, the label will wrinkle while wet, but smoothes out again when dry.
I haven't had any issues with the labels coming off when putting the beer on ice. If they are sitting in water, much like some commercial labels, they will eventually come off.