Do yourself a favor and anneal the steel before trying to shape it. The handle There are several options for handle materials and ways of fastening the blade to the handle. I will describe what I have been doing lately. If you want other options then consult David Boye's book. I have been making handles from osage orange, yew, iron bark eucalyptus, and manzanita wood but my favorite material is reindeer antler.
Shrinkage is the biggest danger with wooden handles.
If you epoxy the blade into a piece of wood with some residual moisture then the wood is liable to crack as moisture evaporates and the wood shrinks. The way to avoid this is to thoroughly dry the wood handle before mounting the blade. Antler seems to be dimensionally stable and not need this sort of treatment. The blades I make have a V shaped tang which fits into a slot in the handle. Next I form the slot with my 'float'.