Hi Nihonius.
You are spot on with the large to small forge conversion, especially if you plan to build a lively style solid fuel (which is what you have described). Yes, the holes over which no fuel will be placed should be blocked with some extra clay, dont worry, this will be easy to remove after you are finished.
If you wish to properly anneal your piece, it will need to be slow cooled, though conventional sand at room temperature will be a tad too fast, bury the piece in the warm ashes of the forge and let it cool from there. This having been said, you need not anneal your workpiece every time you stop forging, letting it slowly air cool(normalizing) is enough to ease the stress that you have put in the steel during the forging process. A full anneal is what you want before you start machining the item in question, since it results in a coarse pearlitic structure, which is soft.
RR spike steels vary according to their manufacturers, Usually, the ones with heads stamped HC are in the region of 0.3 to 0.5 percent carbon, a rough equivalent to 1030 to 1050, the ones without the HC are around 0.1 percent, and thus useless for blades. Truth be told, these make average to poor knife steels, but excellent letter openers:) Brush the loose stuff off before forging since any impurities from outside are less than desirable, and large chunks of oxide can cause pitting in the material during forging.
Hope i have been of some assistance:)
Keep the fires burning.
Luke
Staff addition: In the USA HC rr-spikes are not going to be more than .3% carbon, equivalent of 1030 at best. here we have nothing close to 1050 in Spikes.
