Well, we can't quite make a blanket declaration of NO on damascus knives, but there are several things to consider with them.
Some examples of forge-welded damascus knives do exist from the 18th and 19th centuries, but not too common. There are also examples of knives that were made from several small pieces of steel that were welded together to have enough steel to make the final knife. These weren't intended to be a "damascus" knife, but if you etch the blade you can see layers and areas of different types of steel. And there were still knives around made in the area of Damascus from Wootz steel - the original damascus steel. This was iron that was melted and then shavings of steel mixed in.
The main thing to remember is that those early damascus knives were made that way for the quality of the steel, not for the "patterned" look. The final blade was smoothed and polished. You would not see any patterns in the steel - until after much use and patina. The modern damascus knives are made for the quality of the steel, but also to specifically show the patterns. So they are polished and then etched with acids to show that pattern.
So, if you polish the knife blade up so that you can't see the patterns, then the knife will fit in historically (depending upon shape/style). But, as you pointed out, that now defeats the visual reason to have a damascus knife.
So it goes.
Just my humble thoughts to share.
yhs
Mike Ameling