Emersing the whole knife is a bad idea. You don't want to acidify the wood, as this would continue the oxidation of the metal long after the knife was removed from the etchant.
Seriously, don't try to take half measures. I can tell you how to make an etch resist (equal parts beeswax and asphaltum), but that's just another half measure. If you really want to do this, do it right.
As Unky Gumbi noted, I think the blade looks fine as it is. You really don't need to mess with it.
For future reference though, one other trick I use is to take one of the cut off pieces of the billet, sand it down to 800 grit, then do a trial etch with it. That way I know what to expect (and how to get the expected results) when I etch the real blade.
- Greg