In my opinion, the best way of doing limited and controlled heating for minor adjustments without the whole thing turning into a "wet noodle" is to heat the area of kydex you want to adjust in the steam coming out of a boiling teakettle spout.
In this case, you probably want to heat JUST the opening area to the sheath. Wear leather gloves, heat just that area in the steam blast and then insert/extract the knife a few times. If it gets too loose, heat it again and then squeeze it tighter with the gloves on...so long as you keep your fingers out of the actual steam path you should be OK.
The Kydex will NOT turn "totally limp", but you will be able to make it move with a bit of force and it'll then take that set. You're *barely* heating the Kydex to a point where it'll permanently change shape, so expect it to cool FAST as hell, which is fine. If you have to make several small adjustments, no sweat.
Once it looks OK, dry the knife really well and then hang the sheath to dry with no knife in it. There'll be a ton of moisture still in there, let it dry before re-sheathing...this is what you'd do after an outdoor session with rain, for example. Do this even if the blade is ATS34 - that steel is "not EXTREMELY stainless" (if that makes sense), it's a "borderline stainless/tool steel".
Jim March
Equal Rights for CCW Home Page
http://www.ninehundred.com/~equalccw
