If there's red rust on it, it'll likely continue to get worse over time, if left alone. Rust will trap & hold moisture and other stuff that allows more rust to form underneath it. The pitting will get deeper & deeper as a result. The red rust can be removed in such a way as to protect the 'patina' (black oxide) that otherwise is desirable on 'old' knives. Some very fine steel wool (#0000) and mineral oil or WD-40 would work to scrub the rust off, without really altering the patina on the rest of the knife. Once the blade is cleaned of the red rust, it can be oiled or waxed to protect it down the road (if keeping it as a display piece).
Red rust is destructive to blade steel, so I see no legitimate reason to leave it in place, even if the item is considered 'antique' or collectible. With knives, some collectible value will likely be lost if the black oxide (patina) is removed, either by buffing/polishing or sanding/grinding, leaving a 'shiny' appearance on the steel and therefore diminishing it's 'antique' character. I suspect that's most of the reasoning behind what you've heard from the 'expert' collectors, whomever they may be.
You might post some pics (closeup & clear) and this same question in Bernard Levine's sub-forum here on BF (link below). If there is any real collector value in your knife, he and others in that forum could give you some tips about how to go about cleaning it and protecting it. Whichever the case may be, I'd personally still worry about leaving any red rust on the knife, unless you can guarantee it'll never be further exposed to moisture or humid conditions, which will perpetuate the rusting problem.
http://www.bladeforums.com/forums/f...-Levine-s-Knife-Collecting-amp-Identification
David
P.S., Welcome to the forum, by the way.
