The wiki for references
lists Samurai Reincarnation as the sword origins source
Jubei approaches the secluded mountain home of the legendary sword maker Muramasa. He is shocked to learn that his father, Yagyu Tajima, recently approached Muramasa to commission a sword that would not only cut human flesh, but demonic spirits as well. Jubei wishes a similar sword as well, since Muramasa was exiled by his master Masamune due to his evil nature, and only a truly evil sword can defeat an evil demon.
Jubei is played by Sonny Chiba who appears in several other referenced films, and specifically as the
Hattori Hanzō in 3 seasons of Kage No Gundan tv series.
The reported amazing sword craftmanship that you cite from the movie, and
restated by Ebert
The film also uses the constant repetition of wild tales to make them all the more fascinating, like the fabulous virtues of a Hatori Hanzo sword
has the additional effect of placing the Hatori Hanzo name in a honored and high profile status. So one interpretation of the swords' reputation is the elevation of Hanzo/Chiba awareness and appreciation, giving a venerable nod to a giant in the film genre.
As to the technical art itself,
Nova's Secrets of the Samurai Sword
describes a process which has skilled labor, specific material composition. Several factors which together create a scarcity, rarity.
One step called quenching, involves a high degree of skill:
This is a tricky stage, in which as many as one in three swords is lost.
Procuring the raw material to achieve the grade of steel:
smelters using ancient techniques shovel roughly 25 tons of iron-bearing river sand and charcoal
The right knowledge and execution in cooperation:
It has taken 15 men nearly six months to create this single katana sword.
All this work, then we are saying one man can accomplish it alone. The result of a quality blade will be rare and unique.
I will also throw in the idea that the capable smiths become targets. With assassins, why allow any competition to commission new swords. Can the smith defend themselves? even rarer (I think somewhere it mentions Bill was Hanzo's student so Hanzo is not only a master swordsmith).
Also, if their swords are buried with the dead samurai
then the rarity increases.
So I can see the magnificence of a coveted blade growing substantially, and into mythical proportions.