look carefully at the blade, is it is it a soft metal body with a hard cutter joined at the just before the cutting edge?
I am not talking about a rust line , if there are 2 distinct kinds of metal in the blade, then what you have is a carbide edged cutter, also some of these blades are solid carbide. but these generaly dun't rust.
if either of these are true, it into the scrap heap.
If what you have is HSS it is going to be different from other steels you have worked. I would'nt try to word this with hand tools, you need a grinder.
1.your spark test sounds about right for HSS
2.It is hard to sharpen, but the results are worth it
3.grinding can be slow soing, it's hard, expect this.
4.I always hold the blade with vice grips.
5.ignore the rust, unless it's realy deep you'll grind it out.
I always start with the tang, you cannot drill for a rivited handle. The best thing I have found is add a pieceof mild steel(this a lot easier than grinding it out.) 5to 6mm is enough for the tang. I use mild steel, and file a v in one end. about 2 cm from the base of the ricasso area taper the steel to the same width as the tang extention,the grind the mating point that fits the V in the extention. the 2 pieces are silver brased at the the V joint. (I do this with a plumbing torch, it's not difficult) If the joint isn't lovely, remember your going to cover it with a handle.
to cut the blade to length you can use an abrasive wheel on a circular saw, or as I usualy do,score both sides deeply at the cut line, clamp it in a vice and snap it off.
now you just grind it and haft it and you're done
