I generally leave mine in the oven at 450 for about 20 minutes, take it down to 300 for 10-15 minutes, then 200-250-ish for ten minutes. After that leave the oven door shut, turn it off and do not touch for at least a good hour or two. Don't take it out until it is room temperature. one way to visually check hardness is that you want it to turn a kinda golden color, like a good dark beer. If it get's blue it's still barely usable, but perhaps best used for throwing, etc. If it turns purple forget it, toss it out and start over again. (unless you take a crash course on re-tempering) repeat this method three or four times. OH! ALMOST FORGOT!!! wire brush and clean the hell out of that file before putting it in the oven. it leaves much less foul odor and makes it easier to judge color.
Shape it using a belt sander or a disc grinder. This is kind of a matter of preference, but I've personally had better luck with a 1" stationary belt sander. Keep a bucket of water handy, and do not let the edge turn color when grinding it. dip it in the bucket as soon as it feels a little warm to your hands. a hidden tang knife is a little easier to make, since you don't need to further soften the handle for drilling.
One final test I've learned is to take my blade into the hardest piece of wood I can find and baton the p!ss out of it with a rubber mallot or other heavy piece of wood. If the edge chips, or breaks you got it too brittle. If it rolls the edge, it's too soft.
This is a very, very primitive method that was learned by Fiddleback and myself from a man named Sarge in the Cantina. I'm sure Andy can tune you into the method better than myself. For that matter, I'm sure the knifemakers can give much better advice, but this method has been making a few really good scary sharp users that have always done well.
This one is the very first I ever made. Primitive SOB, aint it?
http://pg.photos.yahoo.com/ph/karieann69/detail?.dir=2681&.dnm=1706scd.jpg
http://pg.photos.yahoo.com/ph/karieann69/detail?.dir=2681&.dnm=f411scd.jpg
This is the second one. you would never believe how much cursing and swearing went into the creation of those two pin holes. about seven hours worth. Incidentally the reason I decided to skip drilling the third one. (life got much easier once I learned to soften the handle without screwing up my blade)
http://pg.photos.yahoo.com/ph/karieann69/detail?.dir=2681&.dnm=b41e.jpg
This one was made for my sons friends tenth B-day
http://pg.photos.yahoo.com/ph/karieann69/detail?.dir=2681&.dnm=984bscd.jpg
This one is the ugliest I've ever made. I'll probably throw it away tonight, now that I think of it...lessons learned I guess....
http://pg.photos.yahoo.com/ph/karieann69/detail?.dir=2681&.dnm=1a5bscd.jpg
This is one of my favorites. five inches of razor sharp versatility...
http://pg.photos.yahoo.com/ph/karieann69/detail?.dir=2681&.dnm=2771scd.jpg
I've got a couple more "quickie projects" that I did a Scandi grind one and had my wife cord wrap. they're really fun knives. Showed one to a buddy the other day who couldn't hardly believe it was made by lil ole me from a crappy old file, until I showed him the part that said "Mill Bastard" on the handle.
Hope ya' have fun with it!