I believe it was our esteemed colleague, Mr. Cougar Alan, who mentioned in a previous post that steel barstock is cold rolled these days and thus the grain has already been as aligned as it's gonna get, and he's pretty much right.
As to banging scraps of steel or iron into a solid bar, that's been mostly a Japanese thing for the past 1,000-1,200 years now. You see, in Europe they were making homogenous crucible steels suitable for use in weapons since the 800's, maybe even the 600's.
When iron was first discoverd, there was no way to make a flame, or rather they didn't know how to at that time, that was hot enough to melt it from the ore. They obtained iron either from relatively clean iron meteorites, or from stony ores by heating them up and beating them down to remove the slag. Needless to say, that doesn't yield a quality product.
All else being equal, I'd just as soon dropforge a knife into it's rough dimensions with a die and big ass powerhammer and then just clean it up with a buffing wheel or a little light grinding here and there.
This isn't because I think that the dropforging will make it a better blade, though you'd only have to heat and smack it once which means you lose less carbon, it's just that dropforging is a new and economical manufacturing process that will save me labor and thusly allow me to sell my product for less.
Oh yeah, the more you heat and beat steel, the more carbon you're gonna lose and the more oxygen and such you'll gain from the atmosphere. In fact, because you lose carbon with heating and beating this was an important step in early steelmaking to reduce the carbon content to desired levels.
To add yet another level of complexity to the manufacturing of edged weaponry, in 19th century Western nations it wasn't uncommon to cold roll sword and knives to rough shape and then finish them with some grinding. Large waterwheels were used to supply the force needed, I think some steam turbines were used later on, I know Ford used'em, but he made cars...