I still use a HF 1x30....their blue zirc belts will work at first but I would definitely get at least some good ceramic 150 grits and cork/scotch brite/norax belts to finish. Leave the brown alum. oxide for the handles/wood/micarta. Ceramic belts as mentioned or from supergrit will work much better. I still use hand saws, hack saws and hand drills for just about everything else. I found that a good sharp saw will cut just as fast as a band saw, just more work. And a cheap $9 angle grinder from HF with cutoff wheels makes short work of your larger steel cutting tasks. I too used a dremel a lot when I started, until I realized I could save a good deal of money because a hacksaw blade is cheaper and lasts much longer etc.
The biggest downside is not how well the HF grinder grinds, it's how much of a pain it can be to get it to work correctly. You'll need a little bit of ingenuity to make the platten work, to make the tool rest work (i simply clamp a cutout of a small piece of flat wood for a larger, smoother surface to pull across), etc. Power is lacking, but it will still cut and work even if it does take a little longer than the >$300 rigs. But if you're like me and are only going to do 2 knives or less a month, a $40 HF grinder works.
For heat treat, I have a fire pit in my backyard I built. Landscaping stones on the outside, filled with sand. I prop a hairdryer up to blow at the base of a charcoal bed, kinda from the side. It heat treats simple steels quite well. Stainless is out of my reach, but you can always charge extra and send them off if your customer wants it.
I kinda like not having all the expensive tools and such. It's arguable, but after talking with a lot of people, it's probably not a bad way to start either because it teaches you to get a real feel for what you're doing. I feel that there's an art to getting it right.
Edit: I will amend this to say that small to medium sized knives will work fine with this grinder. Longer and larger faced knives are a bit more for the HF special. For instance, Rhino's kitchen knives would be really hard on the motor with that much surface area. Longer than about 5 inches is going to give you a time keeping things straight. Just thought I'd add that after thought of working on mine.