I won't say that this blade is properly heat treated; it probably isn't. In welding, the problem is the wide variation of heat affects in a very small zone. You can have material that is very brittle just millimeters away from material that is very soft and ductile.
You're describing "normalization", which is a process that makes steel uniformly tough, but "plastic". When you flex it, it bends, and stays bent. "Annealing" is a similar process, where the temperature is raised a bit higher, and the cooling slowed even more. "Annealing" leaves the steel very soft.
In tool making, you're first looking for high hardness (acquired with a "quenching" process). This makes it very brittle; it has no elasticity.
Next, you're dialing back that hardness with a "tempering" process, which is done at a lower temperature than the normalization process, and the cooling can be much faster. When tempered, it's still very hard, (significantly harder than "normalized") but now it is slightly elastic. It will flex, but beyond a critical point, it just snaps; it probably won't take on a permanent bend.
These colors are oxide layers that form at temperatures in the "tempering" range.