Very common area for leaks. My 92 LY had leaks in the same area. The primary source is the molding that connects the front end cap to the sides. I removed mine and used thick butyl rubber tape window gasket material under the molding and then reinstalled the molding. I than sealed the molding edges with flashing sealant. Rebuilding the inside is pretty basic. Wood will work just fine and will remain in good condition as long as moisture is allowed to evaporate and no more water leaks occur.
Good luck with your project. Keep us updated with pics. Love pics of repairs.