Okay, I didn't want to do this, but;
Damascus and pattern-welding are not the same thing. Just because you see a pattern in damascus does not mean it's pattern-welded. Pattern-welding involves something akin to a damascus core with an edge of high-carbon steel forged-welded to it. This is not debatable. We have x-rayed many medieval swords. If you don't believe me, go read a book. Not one written by a modern smith, though Jim Hrisolaus seems to admit this fact, but an actual academic book written on Medieval European swords. Check your library or Amazon.com. Eward Oakeshot is a well-respected researcher/author.
Next order of buisness, there are many references to the serpentine pattern and colors(suggesting color-casehardening) present in a pattern-welded sword in Norse sagas. So this isn't the blended to the point of being homogenous steel Cougar is talking about, which brings me to;
Cougar, when European smiths first started forging homogenous steel blades, they took large bars of steel, enough for the whole blade, heated and beated and folded it to work out impurities and such, then forged to shape. Is this what you are talking about? Or do you mean that traditional true damascus was folded until it was homogenous?
As to layers of nickel to seperate the layer of steel from eachother, wouldn't that weaken the blade un-neccesarily? I mean, the only thin that'd be holding it together is the fact that the metals were twisted together. Or can nickel be fused to steel at forge-welding temperatures?
Forging itself is just a fetish. Most of the advantages of forging have been rendered obsolete by modern metalurgy. Anyway, even forged blades are finaly shaped by stock removal. Damascus itself has never proven to have any advantage in terms of cutting ability over homogenous steel in any of the knives I've used. In fact, I've never heard a dispassionate user say that his/her damascus knife had any special properties in that area. This is assuming we're talking abou tradtional damascus, high and low carbon folded and welded together. Which brings me to another point;
Any increased toughness in damascus would be due to the fact that the carbon content in the low-carbon steel isn't enough to harden the steel, and we all know the softer the steel, the higher the impact resistance. Within reason, obviously molten steel is as soft as it gets, but it would just splatter if you struck it. There isn't significant carbon migration in this 512 layer stuff comonly found nowadays. I guess it depends on what you mean by significant though. Anyway, that made a difference a long time ago when we had a primitive metalurgy, now it's mostly a non-issue when it comes to knives. The only thing like this in industry I can think of is eplosion-welding where you typicaly have a framework of steel you want planking of aluminum over(I encountered this in relation to shipbuilding), so you use high explosives to drive them together(it's pretty hard core!) and you can actualy see the shockwaves in the cross-section of the end product. However, this is done to take advantage of light weight of aluminum and strength of steel(so you can carry more cargo), not to make it more shock resistant.
I know I forgot something I had to say, but I guess it can wait/isn't important.
Anyway, my final word: You can make a good knife from damascus, but it's mostly a looks-thing.