I would soften the entire piece, grind, drill, file, whatever, and then harden and temper.
If you are going to do any grinding with power tools on the cutting area, more than likely, you will ruin the hardness/temper anyway.
If you want to just soften the handle area, you might be successful doing this:
In a dark room, suspend the working portion of theblade in water. Take an aceteleyne torch and draw the tang area until it JUST STARTS GETTING A LITTLE RED COLOR, and then stop. Let it cool black. Repeat. Repeat.
Try drilling.
I do that to completely hardened 5160 and W1/2 and can drill, tap, whatever I want.