Although I have never done it myself (not liking leatherwork much), one solution that I have seen is to line the sheath with another harder material.
Kydex comes to mind, it is rigid, lightweight, easily formable and still stitchable. Wood, aluminium channel, sheet and other materials may be used. Look at some of the tactical cordura sheaths. Often they are lined with a Kydex liner. (It may not be pure or traditional enough to suit your style, but the liner material can be laminated inside the sheath between layers of leather and therefore not visible.
A similar problem of snagging and wear from the undercut front sights in pistol holsters is addressed by integrating a full length U channel to guide the sharp edge in and out.
Try posting in the sheath makers forum, or send the job out to several sheath makers and see how they each solve the problem differently.
Best Regards
Steven