Thanks for the compliments, fellas.
I suppose this way might take more time or skill, but it's not as bad as it sounds. If you have a chisel with a wide, flat edge, it would help. I did a lot of the carving with the spey blade on a stockman pocketknife. You could also make some small sanding blocks to smooth out the carving on the inside surfaces.
Just trace the outline of the blade on one of the boards, and start carving. Go slowly and keep checking how the blade fits so you can see where you need to carve away more wood. It may help if you rub the blade with a thin coating of chalk dust, or oil (don't use too much oil though! you don't want it soaking deep into the wood). This way, when you press the blade against the wood, it will leave a mark on all the high spots, showing you where you need to carve more. You could use all kinds of different things to do this, and in fact you could do without if you press hard enough.
I prefer to carve a "shelf" on one of the halves for the edge. If you make the seam directly in line with the edge, you'll have a greater chance of splitting. Once you have both halves carved to fit the blade, then carve the outside so both pieces have the same profile. Then you can glue them together, and wrap it tightly with thin rope or twine to hold them in place until the glue dries. (this works much better than clamps)
The scabbard in my picture was never really finished, since this is my "beater" knife. It needs a metal throat to reinforce the wood and keep it from splitting at the mouth. (I've had to repair it several times already) A metal tip would not only help hold it together, but also protect the wood from damage, since this area is most likely to get banged around.
I really don't know what kind of wood is "best" for this. I used walnut since it's fairly strong and pretty, and since we've had over a ton of it in our wood shed for 35 years. Whatever wood you use, it should be very resistant to splitting.