There are two main methods to remove rust from hand tools. The first method 
is by some type of abrasion, the second is by chemical methods. Both methods
can be very effective if done properly.

Abrasive Method of Rust Removal

The most common method of removing rust from tools is by abrasive methods. 
Even woodworking purists who claim to only use planes and scrapers surely 
have
some sandpaper laying around. Rust, like steel, will abrade with the use of 
sandpaper. However, this method is not selective. The more you sand, the 
more
metal you will remove. This method works well if the rust is limited.

I have found a product made by Klingspor called Sandflex (I've also heard it 
called Rust Eraser). This product looks like a rubber sanding block. Unlike
a sanding block, this has the abrasive built into the block. I've found this 
product works as claimed and removes rust better than regular sandpaper. You
can purchase the blocks in fine, medium or coarse.

Sandflex Blocks

Chemical Method of Rust Removal

The more modern method of rust removal is chemical removal. While this is 
nothing new, there are some relatively new products out there that are worth 
trying.
I've tried two products with great success.

Spray on Method with Boeshield Rust Free

This product comes in a pump. I tested this on my Jet 6" jointer. Over the 
last two years this tool has started to rust much more than I'd like. The 
humidity
of Wisconsin summers will do that. Rust Free is an acid that will eat away 
the rust rather rapidly. This is a nice advantage since removing rust is 
about
as much fun as replacing jointer knives. To apply, just spray it on and wait 
a few minutes and then remove it with a cloth or paper towel. If the item
is still rusted just repeat the procedure. Since rust is often concentrated 
in certain areas this works great for spot applications. It contains 
phosphoric
acid, so for safety I recommend wearing gloves and safety goggles.

Boeshield Rust Free

Soak Method with Evaporust

The soak method of chemical rust removal is my preference. However, this is 
only useful for tools that can be submerged. This all but excludes any 
stationary
power tools. This product is said to be nontoxic and nonflammable. That is a 
nice bonus. Anyway, the manufacturer says it only removes rust and not 
metal.
In my test, I would agree. On the sharpened areas that don't have rust I 
don't notice any etching or dulling of the tools. This is a very good 
quality
since the item is completely submerged in the solution. Keep in mind, the 
areas where the rust was removed will looked etched because it doesn't 
replace
the metal, it just removes the rust. 

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