Daniel, I figured quite a bit out just from trial and error. I settled on using O1 and 10xx series steels because of their ease of heat treating. I used to send my blades out for heat treating, but I got a wild hair about a year ago and built myself this:
http://www.loneadmin.com/forge_build/Welcome.html
Yes, that's my little forge. It cost nearly nothing to build. It works well for 10xx and O1 where you don't have to soak at temp for very long, and just need a rising heat to harden. It has it's shortcomings, like the fact that it's tiny, and the heat can be very uneven from front to back. But it works, and works well.
The air hardened steel is probably A2, the water W2, and the oil O1. The problem with water hardening steels is that, sometimes, they crack when quenched if you heat isn't absolutely perfect. Air hardening steels tend to require a long soak at a precise temp, and any deviation can mess it up big time. O1 is one of the most forgiving of tool steels though, and you can even harden it with a MAPP gas torch. The first couple knives I made, I used a couple MAPP torches and stuck the blade between them in the open air. It worked, but it took a while.
Used motor oil is okay, and will get the job done. It stinks to high heaven, however, so don't do it in your house. You can really use any kind of oil for O1 for this project, and get acceptable results. Peanut, soy, canola, or even corn oil will all work. Transmission fluid, which is mostly mineral oil, also works well. The important bit will be to get the oil warm so that it's viscosity is reduced, and it can "wet" the steel better as it's cooling.
But, this project is so easy that it would be tough to screw up the heat treat of these things. No matter how you go about it, it's going to end up harder than when you started, and more than hard enough to cut threads in rubber and plastic.
I'll toss out the same advice that was given to me a couple years ago - don't trust your eyes, use a thermocouple to see what the temp of the steel is. It takes a while to really be able to judge the temp of a steel by color. I still can't, since it just doesn't appear red to me at the temp that it's supposed to be "red". It looks more orange to my eyes.