There's nothing wrong with using a torch if you do like Don does and leave yourself stock to grind away. You're going to have two layers to deal with at the edge of the cut. The heat affected zone is one, and the layer of slag and decarb is the other. Don's picture is an excellent example of how to do it right. In the bottom right corner you can clearly see on the edge of the plate the heat affected zone is minimal, and all his cuts are rather smooth.
The danger with a torch is cutting to slow. Too much heat and oxygen for too long in a single place is A Bad Thing™ just like it is in your forge or furnace. But a properly set up torch or plasma cutter, especially in the thickness materials we work with, moving at the proper feedrate will keep the area you need to remove from grinding minimal. It isn't the heat affected zone you have to remove, it's the slag and decarb that is no longer steel. The heat affected zone is simply tempered, and can be brought back to full hardness.
If you're good with a torch, cut out your profile an 1/8" big all the way around and grind it back. If you're not good with a torch, make a template to trace (although a suitable template for torch cutting has similar issues to make that you are experiencing with your knife blank).