Questions from an artist who writes blessings and creates art around them.
Q:“Am I allowed to draw over the letters, including Hashem’s name if you can see them underneath?”
A:How you treat Hashem’s name is a metaphor for how you treat Hashem. How literally Jews take metaphors roughly depends on where they fall on the denominational spectrum. Thus some (most) Jews would say that painting transparent watercolour over a Divine Name is fine if it contributes to making it beautiful, but a few would think it inappropriate. Without knowing you personally I cannot say how you should feel about all that.
Q: “If I make a mistake and the writing is not legible anymore, do I need to bury it?”
A:If a text is damaged but contains legible Divine Names it is proper to bury it because it is improper to dispose of Divine Names in any other way. If you made the Name itself illegible by making the mistake, such as spilling opaque paint onto it, opinions vary since the Name has already been destroyed, but you should probably go to the extra effort of burying it, to teach you to be more careful next time.
Q:“I use canvas, is that ok?”
A:Okay, look, there is an opinion that says you aren’t allowed to write verses from Tanakh on anything except kosher parchment, with anything except kosher ink, in anything less than book-length amounts. There is also an opinion that says someone who writes down blessings is like someone who burns the Torah (כותבי ברכות כשורפי תורהת Shabbat 115b). The vast, vast majority of Jews do not abide by these opinions.* I assume you are among them since you create blessing art on printed material. In that case, obviously it is fine to use canvas; canvas is a respectable art material. I wouldn’t suggest you go all “Piss Christ” because ugh, and I personally think it would be weird to write blessings on parchment made from pigskin, for instance, but basically there are no rules about this beyond “Don’t do it.”
* Even very frum ones. They too use prayerbooks, for instance. I might talk about that at some later time.