I hate to keep tooting my own horn, but I have done a fair amount of heat treating and tool making, cutting tools, knives, etc. It's not difficult to do. The right way is to anneal the steel first, machine it then retemper it. Most tool steel stock is sold annealed since they don't know what you plan to make out of it they don't know how hard to temper it to, and don't want to be responsible for damaged tools (or damaged people) :^) Annealed tool steel is as easily machined as mild steel.
If you know that the steel you have is tool steel you can find out the state of hardness with a simple triangular file. If the file "bites" easily and leaves a deep notch, the steel is either mild, rather than tool steel, or is annealed (most common steel is mild steel). if the file just slides on the surface, the steel is tempered. (by the way, old files are an excellent source of high grade tool steel for knives, chisels and other cutting tool making, pick up any you see at yard sales or flea markets no matter what the condition)
Normally any machining done after tempering is to adjust for any slight heat distortion and is done by grinding or honing.
Small pieces can be annealed and rehardened with a torch and the temper drawn down with a hot plate. Larger thicker or highly critical pieces are better done in a kiln with an accurate pyrometer.
Yes there is a LOT of bad information in the references. I find that most of the authors of texts are writers, not experienced craftsmen. They get their information from reading other writers work and pass it on as gospel. Pretty soon the same bad info is in so many texts it becomes (worthless) fact.

to be more clear- we were discussing making the hard steel soft, then machining it and re-hardening...the tricky part seems to be exactly how hard to make it and making different areas of the piece different tempers..

For *all* of the specific questions I've heard so far, the best answer has been either grinding or starting with a different piece of material, and not to deal with machining of hardened material or heat treating at all.