Mike, while your math may be right, the argument is specious.
The math you used is based on the just carbon content. We are not forging a pile of carbon , but a piece of steel with .89% carbon. The loss to the carbon may be 5.6%, but the loss to the steel is only .05%. It is the steel we are making a blade from, not the carbon.
You are correct that the loss increases with more high heat time and higher heats. The forge may be balanced for a reducing atmosphere when forging, but when you remove the blade for forging, the oxygen in the air is higher.You are also correct that the balanced or slightly rich forge chamber is not rich enough, nor is the blade in there long enough, for carburization to happen.
When making damascus there is a higher degree of carbon loss, which is one reason for a power hammer or press. More heats = lower carbon content. If you lost a lot of carbon making damascus from 1084 and 15N20, the total carbon content may fall to .60% . Properly heat treated and tempered, this will produce a superb knife.
Too much emphasis is put on carbon content most of the time.
When making tamahagane, having a mix of carbon content from 0.00% to as much as 3.00% is important, and the smith knows how to fold and blend them for a final carbon content of .50-.60%
Scale, decarb....all add up to loss of carbon - which is unavoidable - but can be reduced to a certain degree, and compensated to a certain amount.
Glad to see folks thinking about what is happening in the steel.
Stacy