Can it be used on the exterior of a 2nd story of a house if properly sealed and painted

No, not for outside use. It is pressed paper paneling.

I wouldn't really take that chance after all that work. That is why there is interior wood and exterior wood, there is a difference, they are treated different.

Theoretically, yes. In reality, it will be almost impossible to completely seal this from the elements. Also its thickness, or perhaps I should say thinness, will make this easy to warp and deform due to changes in temperature and humidity. I would not expect this to last more than one or maybe two years on the exterior of a southern house, and climate wise, I do consider West Virginia to be southern.