Fred, did you ever worked with rotary cutter like Dremmel etc.? I did, many times (not on blades, of course ) and I can tell you these letters don't look to me to be done with any rotary cutter and the mysterious "halfmoon" might be caused by template's fault.
777, I have multiple rotary cutting machines, including an older version of a Dremel Tool that I acquired a long time ago that I favor over a newer version that I have. And at the level of image resolution that was posted I really can’t say for sure one way or another exactly how the inscription was applied. However I agree with you that a template was most likely used for the dagger here, and the fault could be with it. But the template I have in mind is the kind used with pantograph engravers which come in all different sizes. From ‘industrial size‘ all the way down to jewelers, sign shops, and the ‘hobby’ types. They are also very easy to build and adapt to a Dremel Tool or one of its clones. Regards, Fred
PS: Attached is one of the other images with a couple of areas of interest that IMO should also be looked at very closeup.
) and I can tell you these letters don't look to me to be done with any rotary cutter and the mysterious "halfmoon" might be caused by template's fault. 
