Bruce, at one time I had been investigating using 5160 for Japanese style blades, mainly because it was the only suitable stock I had at the time. I never got around to it but thanks to a post at another forum I now remember one of the things I found out and that was to pre-harden the entire blade before doing the clay coat heat treat.
Here is what Joe W. posted on his method:
"5160 katana can be clay coated and heat treated successfully and the edge will most definitely not break off unless you have a dead soft body and a fully hardened edge.
You can use water if you know what you're doing, but oil is alot safer.
First, bend the sori into the blade exactly how you want it, maybe a little more(1/4 inch or so). Next quench the entire blade in oil and either give it a thorough tempering or flash temper it. Just do something to relieve the stresses. Then add a thick layer of clay to the parts you don't want hardened (I use parks furnace cement--satanite won't work here). Wire the clay on after it's dry. Do one of the following:
Heat the blade up to *just barely critical* and quench, or
heat the blade up very quickly in hot salts so that the edge hits critical before the spine and quench.
A marquench will really help to control the selective hardening, and is a good idea all around.
Makes a tough blade with a decent hamon (no ashi in there, though)."
-Joe W.
The entire thread is here:
http://www.dfoggknives.com/cgi-bin/IkonBoard/ikonboard.cgi?;act=Post;CODE=02;f=3;t=87
Not a lot of play with it yet and I hope you don't mind my asking over there. It was driving me crazy trying to remember what I had dredged up on this before. 5160, being such a tough steel seemed like a good choice for a katana or sword of any kind.
I've been so busy with work and family (and home maintenance, ugh) that I haven't had a chance to play in the shop in quite a while. You've got me fired up now though! I have a 1084 tanto ready to be heat treated using a clay coating but I need to finish my new forge that has been laying in pieces around my shop for what seems forever!
I finally got my pictures developed from Blade too. Got some good ones of both you Bruces! In any case the above information probably just muddies the water further for you!