"Note: The Japanese tried making swords out of blocks of softer and harder steels welded in a sandwich style structure. They tended to come apart."

They won't come apart if the smith can hammer weld, and this is what all weldiing was until acetylene torches came along. You don't have to be a swordmaker, just a good country blacksmith. I have a couple of Japanese knives made that way, and some Scandanavian ones & they work just fine. The Japanese call this construction 'san mai:' hard but brittle steel sandwiched between soft but tough steel. Sharpening exposes the hard steel core to provide the edge and the tough outside layers support the core.

'Differential tempering' and 'damascus' are different thiings. Damascus is a patterned steel. either pattern-welded or something like Wootz steel, and differential tempering refers to heat-treatiing: tempering the edge of a blade harder than the back. The tempering mehod using clay described by Shanghaiceltic is one way of doing this. You could differentially temper damascus steel if you wanted to, but it'd be redundant.

clint