If you understand how breathable fabrics work, it makes sense.
Water needs to be able to bead on the outside of the fabric so that the pores aren't blocked. That's why you always use soap, never detergent, to wash breathable garments, and it's also why the coating on the exterior is an integral part of the function.
I'm not sure ScotchGard leaves the pores open (but I don't really know). Most fabric manufacturers recommend NikWax. Skiers and motorcyclists swear by the stuff. For warmer temperatures than skiing and/or heavier sweating than recreational street motorcycling, it's my experience also that letting water out one molecule at a time just isn't enough. Still, you bet I NikWax my walking-around rain jacket, and it works great.