I suppose it all depends on whether you're making a kydex sheath for a knife with a wooden/synthetic handle or lets say a cord wrapped - paracord or lets say japanese wrapped handle.
In the video that Peter Atwood put on youtube.com, he puts no tape to give the actual blade any clearance as far as the sheath. It's not really all that necessary and makes the blade not rattle a lot as as if possible a blade with 2 or 3 layers of masking tape would be. Giving the blade some space from the sheath keeps it from acquiring scratches from putting in and taking it out over time. It all depends on your blade finish as well. What I find is to NEVER use buffing compounds on the edge. Compounds make the edges nice and smooth, but inevitably you always end up with compound on the inside no matter how well you stuff up the inside of the sheath to prevent that from happening.
Cut the right size piece of kydex. Put it into your toaster oven. DO NOT USE mom's kitchen oven or your wife's or your own! You've gotta cook food in it and it's not the best idea as kydex gives off a little odor especially if you over heat it a bit.
Put into oven at 275' and watch the kydex to start curling up on the edges. When it does, take it out and wrap it around the blade immediately and put into press making sure you pull it tight towards what you want it molded to.
After it cools off, break the seal that is formed and mentally look at the blade to see how it's gonna fit in your mind. Use a bandsaw or something to cut it to final profile towards the opening of the sheath where it's gonna meet the handle. If the knife has somewhere near the choil or something to lock onto, all the better. If it's going to actually lock onto the handle just adjust with a heat gun a little near the opening of the lip and put the knife in and use your finger to apply a little pressure to where it will lock onto the knife. it should harden up pretty quick and there you have it, play with it some more if you don't get it the first time. after a dozen or so, it will be easy. Clean up edges with a nice new scotchbrite pad after grinding the rest of the sheath to profile with a belt grinder. using a dremel takes a bit of skill in my opinion as the dremel head is somewhat small and easy to botch up if you apply more pressure in one area than another. \
Do all final sanding and profiling before putting any rivets in. make sure to clean up any excess that drilling will cause to fold between the folded sheath. Make sure everything is flat before riveting the sheath.
WEAR A RESPIRATOR when working with that stuff. It's bad stuff when ground on.
