Drew, the larger pieces of junk in your 500x photomicrographs looked similar to some photomicrographs of steel mill scale I was looking at. Mill scale could certainly be a likely candidate because it is by far the most common impurity that is found in a steel mill. Another slice just a few thousandths away might well have been much cleaner and more homogenous. Scale itself has many and varying components, dependant on the alloys in the steel. Hence, the varying appearance under magnification. Ferrous oxide, various other iron oxides, magnetite and hematite are prevalent. I examined a very thick piece of scale last night, about 3/16" thick. Surprisingly, it was very different, from the inner surface that contacted the steel, to the outer surface that was in contact with the reheat furnace atmosphere. So just the orientation within a steel sample could possibly make it look like different animals. The inner part was dull and much more granular while the outer part looked smooth and shiny, almost like blue-black glass. The outer skin had a noticeably stronger attraction to a small magnet too.
I'm sure some would look at those photos as proof that Damascus is full of flaws and weaknesses, but rolled-in mill scale is probably just as likely to be found in early fluid steel barrels.
