Would it be tolerable to use ready-made, albeit used, tools like old wrenches, hammer heads, kitchen knives, etc. and shape them into what you want? 
Some of them may be rusty. I even have an old machete I want to turn into a knife. Must I shove them into a crucible and work on them from scratch or could I just work on them the way they are presently?
Use what you have and learn as you go. Soon you’ll see material where others see junk. It’s a curse lol
No idea but I can tell you this with some confidence: Iron rusts. Iron is the base element of steel. The higher iron content in your steel the more rust you are likely to see.
Steel is an alloy of iron combined with other metals to alter its characteristics, such as adding chromium and nickel, which are very strong elements that makes the steel alloy more resistant to rust (aka. oxidation) this is the basic composites in stainless steel. Tool steel is a formulation that often includes tungsten and manganese. Other materials commonly alloyed with iron to make steel have unique properties are magnesium, nickel, silicon, carbon, copper, vanadium and darned if I know what others 
Ductility refers to a material’s ability to deform under tensile stress; this is characterized by the material’s ability to be stretched into a wire.
Malleability, is a material’s ability to deform under compressive stress; this is characterized by a material’s ability to be formed into a sheet by hammering, pressing or rolling.
Highly malleable materials can be formed cold using stamping or pressing whereas brittle materials must generally be cast or thermoformed to significantly alter their shape.
… the interesting stuff to learn about metal is almost endless 
Hey, that turned out pretty darn nice Trials, I see lots of people using ballpeen hammers to turn into hatchets, nice to see a claw hammer too 