Hayshaker, first things first, if you expect to end up with a high quality sheath you have to start out with top shelf leather, pre dyed leather as long as it's a good quality vegetable tanned leather will work ok in most instances, but may not give you the hand made custom look you're aiming for, also, some pre dyed leather will not take conditioners well and may dry up or crack faster than pre conditioned hand dyed leather.
My advice is, if you intend to make high quality sheaths for your custom knives, don't try to do it on the cheap, buy half hides of clear vegetable tanned tooling or skirting saddle leather in 8 ~ 9 ounce thickness, my preference has always been for horse hide over cow hide, but either is fine, hand stitching is better and nicer than machine stitching any day in my opinion.
If you want to practice your technique use scraps or cheap leather, but if you're working on a piece for a customer, always give them the best, remember, your name or makers mark will accompany your work for a long time, make it count for you, not against you.
Cutting, sewing, and finishing your leather project is only half the work, the choice of leather, how you condition it, and how careful you work with it will all show in the finished product, use the right conditioners for the leather you're working with, once done it has to have a finish applied that will set what ever dye you used, if you don't the dye will run when it gets wet, even from sweat.
Most leather dyes are alcohol or water based, to get a more even finish try dampening the leather with water before applying the die, alcohol will mix with water, moistening the leather will help it to drink in the dye more evenly that if the leather was dry.
Lastly, buy a good book about working with leather and read it carefully, one that has less to do with designing or cutting and stitching, and more about the leather itself, unless you know about the product you're working with you will continue to have problems with the finish you end up with.
Good luck.