Not in small amounts. Just think of it as part of your RDA of iron to help keep your hemoglobin count up.
2.will it hurt anything other than looks or re-sale value?
It can in a couple ways that I know of:
(1) If it pits the knife and food particles accumulate in the pits, bacteria can grow in there. As has been mentioned, maintenance like cleaning, drying, and oiling can help prevent this even in really gnarly pitted knives.
(2) If the very extreme cutting edge gets corroded enough, the eroding away at the junction of the bevel planes will affect the cutting/slicing ability of the edge. In the extreme, consider the eroded blades of non-stainless knives that have lain in moist dirt for extended periods of time. At the limit, these blades simple rust completely away.
3.what do you give up specifically when you go to a rust free or stainless steel? (this I would like to have some answers like toughness, and re-sharpen-ability )
Generally, the stainless steels are more brittle than the simple high-carbon steels. This makes these stainless steels poorer choices for choppers.
Two points to remember about stainless steels:
1. The name is "Stain Less" not "Stain Free". Given the proper environment they too will eventually stain and/or rust, however at a much slower rate than the simple high-carbon steels.
2. In the stainless steels, as in all steels,
HEAT TREATING IS KING!!!! Mess up the heat treat and even the finest exotic steel becomes marginalized. This is the strength of the Wauseon shop -- refining the heat treat to get a high degree of toughness at reasonably high hardness in all their steels. Consider the infamous D2 steel Deputy Sheriff smash test done a few years ago by the Swamp. As shown at the link below, that's amazing toughness in a semi-stainless steel that should have shattered under the abuse, but stood up to the abuse quite well.
http://www.swampratknifeworks.com/cgi-bin/ultimatebb.cgi?ubb=get_topic;f=10;t=006743
4. Can this rust under the rubber handle be somewhat prevented with maintenance?
Yes, somewhat but not completely. If this is a deal-killer for someone, I would advocate some testing of sealing the handle/metal junctions, including the lanyard tube area, with something like the ultra low viscosity cyanoacrylate adhesives (super-thin super glue) that are pretty easily found in the $5 per fluid ounce range.