Once a blade begins to rust, does that mean the knife is ruined?

When referring to steel, stainless should be 2 words - stain less. It will still rust (except for H1), and when stainless rusts, it's usually deep pitting rather than just surface corrosion.

If you don't mind the steel not being like a mirror, clean it REALLY good, then give it a forced patina. That's surface corrosion that looks grey, and actually protects it from further rusting. It will basically look like an older knife. Lots of us do that because we like the look anyway.

You can use vinegar, a potato, lemon, lime, etc. Stick your blade into it, and let it sit overnight. In the morning, you'll have a knife with more character, and it will be more resistant to rust!

Your point is well taken. Stainless, or stain less if you prefer, should more properly be referred to as "stain resistant."

Here in the cool dry air of the Rocky Mountains rust is seldom a problem, even with plain carbon steels. Yet in areas of high humidity, especially near salt water, virtually any cutlery steel will rust if improperly cared for. :(
 
yesterday i found out that someone left a hawkbill purning knife outside for like 3 years and i though it damn near rusted thru. I used a dremel grinder bit and sander bit to clean the rust off the blade and my paperwheels to give it a razor sharp edge and it's pretty much as good as new so I'd say its not necessarily ruined if there is some rust.
 
The surface of the metal might be shot, it's probably pitted so badly that you'd NEVER get it shiny again, but that doesn't mean you can't put a heck of an edge on it! One of my friends jokingly handed me an old fillet knife off of his saltwater boat that was completely rusted, you literally couldn't tell which edge was supposed to be the sharp one aside from the blade curve. It didn't take any longer than any other severely dull knife, the 180 grit belt tore off that rusted edge and popped up a burr, and the rest was just the standard belt progression down through white compound on leather. It'd smoothly push-cut paper when it was done, even though it still looked by and large like rusty crap.

It's actually a rather cool-looking knife now, the rust is very smooth, dark and even with a highly polished edge. :D
 
The surface of the metal might be shot, it's probably pitted so badly that you'd NEVER get it shiny again, but that doesn't mean you can't put a heck of an edge on it! One of my friends jokingly handed me an old fillet knife off of his saltwater boat that was completely rusted, you literally couldn't tell which edge was supposed to be the sharp one aside from the blade curve. It didn't take any longer than any other severely dull knife, the 180 grit belt tore off that rusted edge and popped up a burr, and the rest was just the standard belt progression down through white compound on leather. It'd smoothly push-cut paper when it was done, even though it still looked by and large like rusty crap.

It's actually a rather cool-looking knife now, the rust is very smooth, dark and even with a highly polished edge. :D

Just make sure you don't cut yourself with that one. The rough surface of the severely rusted stuff is prime habitat for bacteria to hide out (and I'd bet a rusty fillet knife has seen LOTS of bacteria). Tetanus infections are directly associated with puncture wounds from sharp rusty things, for this reason. Be careful! ;)
 
No kidding! Yeah, that's one that I'm gonna' let him keep, I think. :D

Thanks for the reminder, though, it's definitely good to keep in mind. I worry more about the people I sharpen for, honestly. I'd guess a quarter of them end up bleeding within a couple minutes, I just have to shake my head sometimes.
 
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