WWI WWII German Trench Knife / Boot knife Nahkampfmesser Solingen Omega

[MarkDenver]

Also, this handle feels like bakelite. Is that possible? Does not feel like wood.

[rbminis]

The handle is wood, I can see the grain in your photos. Also, they did not have bakelite at the time of WW I. I would recommend that you not use any steel wool as it will always be obvious and it will take the value out of this piece. Steel wool and gun oil are fine for a gun, but not for a knife.
Active rust is orange or red, the dark spots on the blade can not be removed without removing some of the steel. I suggest you use a soft cloth and clean the blade with one of the products I mentioned previously. They are a very fine abrasive themselves, (essentially, chrome polish).
Ralph.