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Tom Griffin
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I'm getting the feeling that you're sparing me a couple of semesters worth of in-depth technical explanation with this line. So it would be more complicated than heating it to non-ferrous, and then dunking it in ATF? I have an acetylene torch
Well the question is mainly just a theory question, but I actually do want to make some counterbore bits for cap head screws.
It's pretty easy to make a counter-bore out of O1, and that can be heat treated with a torch. Just turn the pilot and the body to size and mill two or more flutes in it with an end mill and machine a bit of relief on the teeth. Then heat to a dull red, or until it's non-magnetic and quench in motor oil. Once it's hard you can stone the cutting edges to sharpen them.
Here's a link that shows exactly how it's done:
Making Cutting Tools in the Home Shop
Tom