You can thin the welt on your platen very quickly (just watch those fingers). You may find that you need to add an extra piece to the welt up by the throat. Just play around with it from sheath to sheath.
You would need to move your stitching back a little from the edge to do the round overs. I tried several tools to do the round overs, but found it was best to just use my belt grinder. On your sheaths you can work right on the platen. On sheaths like mine with some curves in them you need to move to a small wheel. I start with 220grt and then move to 400grt. I don't know what raduis I put on, I just stop when I think it looks right. You can also speed up burnishing if you put a LITTLE water on your edge and run over it again with the 400 belt. Then move onto the hand burnishing.
You can also cut down on the bunching by wet forming before you assemble. The Loveless video shows this in detail. Basically - cut out all parts to size, wet form to knife and let dry. Dye inside and outside of sheath, sew belt loop, fit welt and glue in welt, glue sheath shut, grind edges true and to final shape, stitch it up.
I used to do my sheaths like that. But after a started to fully tool all my sheaths, I switched to another method.
When you wet form after stitching the extra leather around the riccasso has no place to go. So it just bunches up like that. When its wet formed before assemble the extra leather can be pulled out towards the cutting edge. When you glue in your welt you just leave the extra leather long over the welt. You will get a nice smooth area over the blade.
You can see one of mine at the link below.
Thanks, looking forward to your next one.
http://albums.photopoint.com/j/View?u=1663783&a=12749586&p=51195147&Sequence=1&res=high
http://albums.photopoint.com/j/View?u=1663783&a=12749586&p=50695368&Sequence=5&res=high