Im starting to look into making my own rescue tool. I am going through first responder training, and am looking to make a cheap practice knife, and if I do well enough, maybe use it as part of my gear.

here is what the tool will be doing...

*cutting seat belts
*breaking windows
*prying apart some bent metal and some wood, also used for "shoveling" away bricks, rocks, dirt, etc. (obviously im not going to try and do anything real crazy like dig a trench, try to pry two cars apart, etc.)
*general purpose cutting of packages, clothing, ropes, rubber hose, or anything else that might need to be cut at the time. (honestly, the blade part of this tool isnt of extreme importance)
*punching through drywall/sheet rock (i dont think it would be time effective to try and cut through this stuff)
*spending time in water

I already have a design that I would like to use, and it looks a lot like the CRKT fireman prybar tool they sell.

Im thinking i need to go with 01 tool steel, but have no clue honestly. what do you guys suggest?

The dimensions of my design are
OAL: 12"
height: 2"
width: 1/2"
with a handle length of 5" and a blade length of 7"

I would like to make a practice prototype out of 1/4" stock before I make the actual tool.
How much does heat treating cost? I know it is an important part to blade making. Is it something I can successfully do at home on the cheap? I would like to keep this project cheaper than the knife im trying to recreate.

Does anyone have any suggestions for me?

I think that 1/2" is going to be way too thick, that sucker will be pretty damn heavy.  You might be better making a smaller knife for cutting, with a carbide tip on the pommel for breaking windows, and a another one for prying and shoveling.  Not trying to rain on your parade or anything, just giving a different perspective.

I'd go 1/4 inch thick at the most. 3/16 would be even better.

sounds good to me except 1/2" is WAYYYYYYYYYYYY too thick. You'll lose interest before you get it ground down. Use 1/4". It's PLENTY thick.

I say go with O-1. It's what I use, and the heat treat is dirt simple. Flatground.com has 1/4" x 2" x 18" O-1 for ~$22. Rusts easily, but can be passivated with a vinegar finish. It's still not going to be stainless, though. If you want stainless, forget about doing the heat treat yourself the first time.

Hope you have some tools. O-1's a real bitch to grind, but a finer steel you will not find.

Heres something similar to what you are describing,  and its only twelve bucks.

http://www.countycomm.com/eodrtool.htm

I bought one and it came really dull, but it didnt take much time to fix that.  And this thing is tough!!

http://www.ar15.com/forums/topic.html?b=6&f=4&t=179081

Have you read the sticky at the top of the forum, by FOX.  I'm not sure exactly what you want, but reading through his 5 part post might answer a lot of questions for you.