I've used a strop for some time now; for both knives and razors.
I don't know about melting the honing compound into the leather, and rubbing the leather with your hand to soak you skin oils into it, but here's what I've done and never had a problem with.
Step #1: Do as Vic has said. Plain and simple.
All I do is rub a little on and strop. It works fine for me that way. When the leather gets a dark glazed look from steel, I just take a scotchbrite bad and rough it up a bit, and strop some more. My knives stay nice and sharp that way.
Step #2: Depending on how often I'm using the strop, I'll rub it clean of the compound with a scotchbrite pad, and then use a very small amount of what I now know was Neatsfoot oil (Thanks Jeff! <img src="/ubbthreads/images/graemlins/thumbup.gif" alt="" />), and hand rub it into the leather of the strop to keep it nice and soft and pliable. I've got one strop for my straight razor that was used by my Grandfather, and now by me. Never use too much Neatsfoot oil, BTW, as that has the opposite effect, and tends to harden the leather. Lesser is better.
That's what I got, take it or leave it.