Yes, you can activate it any time during a turn, but you forgot or missed when I said that a pokemon turn practically starts at the battle phase, as there is no equivalent for main phase 1.
So, Waboku would only prevent battle damage and status/recoil damage(since that's the only damage in a pokemon battle in a turn). Its okay to decide to use it after the first attack, as you're right, you can practically see how much damage you're going to take at the time of activating Waboku. But I still say that Waboku should only work for one turn, as that's how it is in the game, so that's how it should be. In essence, for the sake of the challenge, it would grant you immunity to one attack, or one use of a multi hit attack (moves like Fly would only require one Waboku on the second turn to nullify), since you can't use more than one attack per turn in singles, and I doubt he'd want to waste his Waboku in an insignificant doubles match.
I agree that the turn Waboku is used you wouldn't die either, as with no damage you can't be killed. The only problem is that it would mean if you would have died, then you would have to revive Deino, meaning that it would act like a free Monster Reborn (there is no other way to enforce such an effect). This would make Waboku the most overpowered card in the game.
Anyways, I suggest he gets a Solemn Judgement: cut half your life points, and you can completely nullify the damage for one whole battle (SJ is pretty strong as a Counter Trap, so this effect seems fitting, especially for the cost involved).
