I usually leave the welt and sheath itself a good bit oversized and then glue up the 3 layers. After glue up, I rough out the profile with the head knife, then clean up everything to 220 grit on the belt sander, still leaving a little meat to remove. After that, I use the stitch groover front and back, then punch the holes, trying to get the back holes into the stitch groove. This is where I struggle the most and the holes on the back side are smaller and harder to thread and often wander from the groove line.
Swiss Heritage's method of 2 layers at a time would help with this; leather would lay flatter when punching and go thru 2 layers at a time. I could do the outer pieces, then glue up the welt to the back and punch from the back side thru the welt, which would also help recess the stitches a bit on the back side, too and make those openings larger. Then poke thru the 1 layer of rubber cement with the awl once all 3 pieces are glued.
If I punch deep enough into the front and back of the leather, that may be enough to recess the threads instead of doing the stitch groove line? I know the front side punches down nicely with the punch going thru the 3 layers, so if I do the reverse side too, that would make stitching much easier and help the threads tuck down nicely without worrying as much about the stitch groover line. I use pre dyed leather or dye the leather before assembling the sheath and doing the groove, and then re dying the groove before punching to hide the groove in case my threads are off.
I got a few different methods to play with for the next sheath!
After sewing up, I clean up the edges again to 600 grit sandpaper, chamfer the corners, burnish, etc. I think I am around 3/16" from the edge with my stitches I believe, maybe 1/4"? I'm still a bit scared to go too close to the edge! LOL. Going closer looks so much nicer, but I am worried I will go too far!