Neopaque CAN be diluted. I wouldn't do it much, if at all. Normally I would tell someone to test it on a swatch, but you bought your bodysuit pre-made. The only way you can test how the diluted paint would behave is if you altered the suit and have scraps that you cut off, or if you go to the fabric store and buy a remnant or 1/8 yard piece of white spandex. If you have no way of testing, I wouldn't dilute it at all.
Yes, you need to be wearing the suit to draw the designs out for painting. You will need to stretch it. And if you can, you should really be wearing it while it's being painted, take a lot of care to not shift the fabric, and keep it on until the paint is pretty dry.
The reason I say this is that thicker, opaque paints are really NOT ideal for painting onto lycra. Neopaque will not stretch with the material, and anywhere you paint it on, the lycra will no longer be able to contract, either. This means that unless you have it perfectly stretched like how you will wear it, the paint will probably distort the fabric and you'll have ugly ripples while you're wearing it anywhere that there's paint.
If the fabric is stretched too much when you paint, you have looseness and ripples. If the fabric isn't stretched enough, it may not fit on you properly or the paint might split.
You could instead stretch it over cardboard and pin it into place when you paint, just keep the above warnings in mind. You need to stretch just enough, but don't overstretch. Also, DO NOT glob or cake the paint on. Work in very thin layers until you have solid coverage.
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